Qualcomm, the mobile chip leader, is reportedly considering Intel, the former king of the PC chip market, for acquisition. Despite this, if the deal goes through, it would be one of the most significant for the companies involved and the countries as a whole.
Ming-Chi Kuo outlines Financial and Strategic Failure Points: Qualcomm and Intel
Currently, Intel formerly monopolized the PC processor market but has met stiff competition in the recent past. The company has experienced production challenges, reduced market share, and consumers’ changing behavior towards mobility. As for Qualcomm, this company has become immensely popular in the mobile market, providing chips for smartphones from many manufacturers, including Apple and Samsung.
Qualcomm + Intel is a huge semiconductor company that will dominate both the smartphone and the PC markets. However, according to renowned Apple analyst Ming-Chi Kuo, the deal would also face stiff challenges. This is because the two companies will have some immense market power and antitrust regulators would most probably examine the merger meticulously. Furthermore, merging two such big and complicated organizations will not be an easy task.
About Qualcomm, the acquisition could have the following advantages. It could give the company entry into the data center and server industries that are crucial for AI and the cloud. Further, Intel manufacturing might aid Qualcomm in weaning off from third-party foundries like TSMC in the process.
Nevertheless, the acquisition could be a dangerous move as well. While Intel has been able to attempt to reclaim some of its competitive advantage, it is questionable that Qualcomm is capable of effectively doing so. The deal could also include enormous risks to Qualcomm, which would likely have to take a lot of debt to finance the acquisition.
The outcome of the deal between Qualcomm and Intel is still unpredictable. The effect of the deal, if completed, could be drastic to the semiconductor industry. However, there are also a lot of disadvantages to such decision-making as well. Only time can determine whether this aggressive strategic move will benefit the company or not for Qualcomm.
