Qualcomm Inc. has approached Intel Corp. about a potential acquisition, the Wall Street Journal reported today.

It’s believed that the mobile chip designer floated the idea in recent days. The Journal’s sources cautioned that a deal is “far from certain,” but the report nevertheless sent Intel shares climbing before the closing bell. The company’s stock price jumped as much as 8% at one point and ended the trading session 3.3% higher. 

The timing of Qualcomm’s takeover push might be influenced by the disappointing earnings report that Intel posted last month. The lower-than-expected results sent the latter company’s stock plummeting more than 25%, lowering the price a potential acquirer would have to pay. Intel was already trading well below its five-year peak before the earnings report. 

Even with the recent decline in the chipmaker’s stock price, a Qualcomm takeover could still mark one of the largest tech industry acquisitions ever. Intel has a market capitalization of over $93 million. The chipmaker generated $54.2 billion in revenue during the 2023 fiscal year, about $18 billion more than Qualcomm.

Today’s report suggests that Qualcomm might sell some Intel units as part of the transaction. One likely candidate for a spinoff is Intel’s foundry business, which manufactures chips designed by other companies. Earlier this month, the unit started shifting to a new organizational structure that would make an eventual spinoff considerably simpler. 

Offloading Intel’s foundry business could help drive down the acquisition price for Qualcomm. Furthermore, it would enable the company to avoid entering a complex market in which it has limited experience. Qualcomm is a fabless chip supplier that designs processors but doesn’t produce them, which means that taking over the manufacturing operations of Intel’s foundry unit might prove a challenge.

Any acquisition that the companies may ink would likely draw antitrust scrutiny. For Qualcomm, limiting the scope of the deal to only a subset of Intel’s business units would have the added benefit of reducing regulatory pressure.

Today’s report comes a few weeks after sources told Reuters that Qualcomm is seeking to buy parts of Intel’s chip design group. According to the tipsters, the company is particularly interested in acquiring a unit that designs chips for personal computers. Intel recently debuted a new laptop chip series, Arrow Lake, that is considerably more power-efficient than Qualcomm’s competing processors. 

Photo: Intel