(Bloomberg) — Qualcomm Inc. is likely to wait until after the U.S. presidential election in November before deciding whether to make a bid to buy Intel Corp., people familiar with the matter said.
Bloomberg’s Most Read
San Diego-based Qualcomm wants more clarity on the new occupant of the White House before deciding its next move because of the impact any future administration would have on the antitrust landscape and the United States’ relationship with China, according to the people. who asked not to be informed. identified discussing confidential information.
Qualcomm could choose to wait until after the new U.S. president is inaugurated in January before deciding how to proceed, given the many complexities of a potential transaction involving Intel, some of the people said.
A combination of Qualcomm and Intel, whose products are key to the digital framework that underpins everyday life – from smartphones to electric vehicles – would surely draw intense scrutiny from antitrust regulators in the United States and around the world. That includes China, a key market for both Qualcomm and Intel.
Intel shares fell 3.3% in premarket trading in New York on Wednesday.
Qualcomm made a preliminary approach to Intel about a possible acquisition of its struggling rival in September. That same month, the company held informal consultations with antitrust regulators in China to assess its stance on any potential deal, some of the people said. Qualcomm has not received any response from Chinese authorities, who are waiting to see if the company actually makes a formal offer, they said.
Intel is at the center of the US government’s plan for a renaissance of local chip manufacturing, making political backing for any deal crucial. The Biden administration has consistently raised the importance of its chip manufacturing policy in terms of national security. Intel is on track to get the largest allocation of funds under the Science and Chip Act of 2022 if it moves forward with all of its factory construction plans. Qualcomm has been talking to U.S. regulators and believes an all-U.S. combination could allay any concerns, people familiar with the matter previously said.
Making a bid after the election may bring other advantages for Qualcomm. Intel will report third-quarter earnings later this month. If that follows the pattern of the disappointing announcement three months ago and the impact it had on the potential target’s stock price, it could make a deal considerably less expensive for Qualcomm. This time, analysts predict another net loss of over $1 billion for Intel.
Qualcomm’s deliberations are ongoing and there is no certainty that the company will decide to bid for Intel and the timing could change, the people said. Representatives for Qualcomm and Intel declined to comment, while the State Administration for Market Regulation in China did not respond to requests for comment.
Under Chief Executive Officer Pat Gelsinger, Intel has been working on a costly plan to remake itself and attract new products, technology and outside customers. As part of a recently announced restructuring, Intel intends to turn its programmable chip division into a standalone business and sell shares to the public or seek an investor for it.
Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel, Bloomberg News reported last month, providing the chipmaker a vote of confidence in its turnaround strategy and a potential alternative to any acquisition by Qualcomm.
–With help from Liana Baker, Ian King and Zheng Wu.
(Updates with pre-market actions)
Most Read Bloomberg Businessweek
©2024 Bloomberg LP