Election Timing Key to Qualcomm’s Potential Intel Bid
As the US presidential election approaches, Qualcomm Inc. is weighing its options carefully. The San Diego-based chipmaker is considering a bid for Intel Corp., but sources close to the matter reveal that Qualcomm is likely to wait until after the election in November before making a move.
Why Wait?
The reason for the delay is simple: the new occupant of the White House will have a significant impact on the antitrust landscape and America’s relationship with China. Qualcomm wants clarity on these crucial factors before deciding its next step. The company may even wait until after the inauguration in January to proceed, given the complexities of a potential transaction involving Intel.
A Deal of Epic Proportions
A combination of Qualcomm and Intel would be a game-changer, with their products forming the digital backbone of modern life – from smartphones to electric vehicles. However, such a deal would inevitably draw intense scrutiny from antitrust regulators in the US and around the world, including China, a key market for both companies.
Intel’s Struggles
Intel shares have taken a hit, falling 3.3% in premarket trading in New York on Wednesday. The company has been struggling, and Qualcomm made a preliminary approach to Intel in September. Qualcomm has also informally approached Chinese antitrust regulators to gauge their stance on a potential deal, but has yet to receive any feedback.
National Security Implications
Intel is at the heart of the US government’s plan for a homegrown chipmaking renaissance, making political backing for any deal crucial. The Biden administration has consistently framed the importance of its chipmaking policy in national security terms. Intel is set to receive the largest allocation of funding under the 2022 Chips and Science Act, if it goes ahead with its factory building plans.
A Potential Advantage
Making a bid after the election may bring other advantages for Qualcomm. Intel will report its third-quarter earnings later this month, and if the results follow the pattern of the previous quarter, it could make a deal considerably less expensive for Qualcomm. Analysts are predicting another net loss in excess of $1 billion for Intel.
Uncertainty Remains
Qualcomm’s deliberations are ongoing, and there’s no certainty that the company will decide to pursue an offer for Intel. The timing could change, and representatives for Qualcomm and Intel declined to comment. One thing is clear, however: the stakes are high, and the outcome will have far-reaching implications for the tech industry.
Leave a Reply