Qualcomm may have recently approached Intel about an acquisition

Qualcomm has approached Intel in recent days to explore a possible acquisition of the struggling chipmaker, a person familiar with the matter said on Friday, a move that could be a transformational deal for the industry but faces many hurdles.

Qualcomm Chief Executive Cristiano Amon has been personally involved in talks to buy Intel, the 50-year-old chipmaker, according to people familiar with the matter. Another person familiar with the matter said Amon has been actively exploring various deal options.

Earlier this month, Reuters reported that Qualcomm was exploring the possibility of acquiring some of Intel’s design businesses, with the PC design division being particularly notable. Qualcomm executives are looking at Intel’s entire business portfolio.

The talks with Intel are in the early stages. The San Diego-based company has not yet made a formal offer to Intel, according to a third person familiar with the matter.

The sources requested anonymity because the discussions were confidential.

Intel declined to comment. Qualcomm did not immediately respond to a Reuters request for comment.

Intel shares closed up 3.3%, while Qualcomm fell 2.9%.

Qualcomm’s move comes at a time of trouble for Intel, once the world’s most valuable chipmaker but whose shares have fallen nearly 60% since the beginning of the year.

If the deal goes through, it could be scrutinized by antitrust regulators in the U.S., China and Europe, and Qualcomm may need to divest some of Intel’s assets to get regulatory approval.

The acquisition would be the largest takeover attempt in the tech industry since Broadcom attempted to acquire Qualcomm for $142 billion in 2018, but U.S. President Donald Trump later vetoed the partnership due to national security risks.

Reuters could not determine how Qualcomm, which has a market value of $188 billion, would finance its acquisition of Intel, which is valued at $122 billion including its debt.

Qualcomm has about $13 billion in cash, according to recent company filings.

It is unclear how Qualcomm will handle the acquisition of Intel’s foundry business, which has invested hundreds of billions of dollars and gathered tens of thousands of engineers over decades to build chips with atomic-level precision.

Qualcomm, which has never operated a chip factory or fab, currently contracts with companies such as Taiwan Semiconductor Manufacturing Co. and uses designs and other technology provided by Arm Holdings.

Intel’s Dilemma

Intel, once a dominant force in chipmaking, has ceded its manufacturing edge to Taiwanese rival TSMC and has failed to produce popular chips for the generative AI craze that Nvidia and AMD are capitalizing on.

Intel has been trying to turn around its business by focusing on artificial intelligence processors and creating a chip contract manufacturing business, known as foundries.

Intel made a series of announcements as part of a memo from Chief Executive Officer Pat Gelsinger that stemmed from a board meeting last week. Reuters previously reported that Gelsinger and other executives laid out a plan to cut businesses and restructure the company.

The company plans to suspend construction of factories in Poland and Germany and reduce its real estate holdings. Intel also said it has reached an agreement to produce custom network chips for Amazon’s AWS.

The Wall Street Journal reported the Qualcomm-Intel talks earlier on Friday.