Qualcomm Set to Grab Chip Industry By The Jewels with Looming Acquisition Attempt...

Well friends, this week continues to get weirder and weirder. First the markets went on a loose cannon and annihilated investors three days in a row, while yesterday, word spread that Larry Ellison is now going balls deep into media (with his nepo son) as a controlling shareholder of Paramount. 

(Source: Giphy) 

And now, we’re getting word that Qualcomm (haven’t heard that name in a while, eh?), is looking to get its hands dirty in the world of personal computers. Because when you're already crushing it in one market (mobile chips), why not go ahead and stir the pot in another, amirite?

(Source: Giphy) 

The target you ask? None other than our poor bastard “innovators” at Intel's chip design operations. Talk about a last second miracle. Apparently (and by that I mean definitely), Qualcomm has been quietly scheming for months, exploring the possibility of buying up parts of Intel's chip design operations. 

(Source: Computer World) 

Now of course, at first glance, why would a company that’s been synonymous with smartphones want to jump into the PC business bed… especially by acquiring a piece of a tech company that’s quite literally sh*t that bed? Well, simple: ambition baby. 

Qualcomm clearly isn't content with just being the go-to for mobile processors. It wants to elbow its way into the personal computer arena, where Intel and AMD have been duking it out for years. 

(Source: WCCF Tech) 

Which is why, rumor has it that Qualcomm’s executives are particularly interested in Intel's client PC chip unit—the brain trust behind the processors that power laptops and desktops. This would be the same division that’s been designing the chips we’ve all been using to procrastinate on Windows since the dawn of time. 

Meaning, if Qualcomm pulls this off (the hurdles are quite low I must say), it could not only give Intel a lifeline, but it would give Qualcomm an additional revenue stream that could potentially disrupt AMD’s market share. 

(Source: Giphy) 

In short, the main catalyst for this escapade comes from the fact that Qualcomm’s existing laptop chips, which are based on Arm technology, have been more like a polite knock on the door rather than a battering ram. They haven’t exactly set the world on fire, especially compared to Intel's x86 chips, which are still the gold standard for Windows PCs. 

(Source: The Motley Fool)

But with Intel currently stumbling around like it’s had one too many at the semiconductor industry party, Qualcomm sees an opportunity to swoop in and, for lack of a better term, grab the entire chip industry by the balls jewels.

(Source: Giphy) 

Again, this makes sense considering that Intel is an easy target to pull your ambitious goals on. The company has been bleeding cash from expensive factory projects and reported a casual $1.1 billion quarterly loss in April. Ouch. So, while Qualcomm hasn’t made any formal moves yet, I would be zero percent surprised if Pat Gelsinger adds Qualcomm's vulture move to his list of “strategic options” at the executive board meeting this next week.

(Source: CBS News) 

Again, this “Jekyll Island” like meeting for Intel, is to discuss restructuring plans, and with this morning's news surfacing, Qualcomm may end up getting some pre-acquisition head nod approval fairly soon. Now again, nothing is set and stone, but Qualcomm, snagging Intel’s PC chip assets would be a game changer.

Not only would it allow Qualcomm to offer a full spectrum of processors, from the tiny chips in your smartphone to the beefy ones in your laptop and server - but, it would dramatically cool down the heat as smartphones sales start to slow down. Which makes sense for Qualcomm considering they aren’t new to “diversification”. 

(Source: Imgflip)

For instance, Qualcomm has already expanded into automotive chips (think BMW and Mercedes) and is now on the hunt for new growth areas, like PCs and data centers. But as of late, breaking into the PC market has been tough, thanks to Intel’s longtime bromance with Microsoft, and the fact that AMD is becoming the new thicc and juicy PC dealer of the decade. 

(Source: Reuters) 

Which is why for Intel, selling its consumer PC chip business would be like cutting off a limb -painful, but necessary if the company wants to stay alive. However, with that said, if Intel does sell, sure it could use the cash to double down on those high-margin markets, where the real money is these days - but it would also mean turning its back on the business that made it a giant in the first place. So clearly a double-edged sword for Intel there.

(Source: Giphy) 

In the end, if this deal does come to fruition, it would definitely result in a massive shakeup and boost for Qualcomm. Especially, considering that Qualcomm is on a tear this year as it crushed both top and bottom line estimates last month with a +3.32% beat on EPS and a +1.88% beat on revenue (with revenue and net income up +11.15% and +18.08% year over year). 

(Source: CNBC) 

With that said though, Qualcomm's third quarter guidance did screw the pooch, leading to a short-term sell off and kink in investor confidence. However, if this acquisition does happen, I’m sure those guidance numbers would definitely be lifted in the future. So yeah there’s that. 

On investor stance, we all know that Intel is down in the dumps… both figuratively and literally as the stock is down -60%, sitting around its 2015 lows. However, Qualcomm definitely has all the leverage as its stock is looking pretty, up +16.74% YTD, and up +107.65% over the past five years. 

(Source: Barrons) 

Now we’ll see what impact this news has on both stocks during today’s trading, but rest assured, this story is still developing. And while it could be great news to some - for Intel, it may just end up being a massive blessing for the company financially, and, you know, Pat Gelsinger's job. 

On the other hand though, as we await to see what this Qualcomm-Intel news transforms into, why stress your brain cells trying to decipher the opportunity when the last FIVE of our Stocks.News alerts all exploded to peak moves of +110%, +185%, +110.10%, 162% and +300%... in LESS than 48 hours?! 

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In the meantime… stay safe and stay frosty, friends! Until next time…

Stocks.News holds positions in Intel and Microsoft as mentioned in the article.