Intel’s product division is not for sale, as Arm recently found out. The British chip designer is lining up after Qualcomm, which was also interested in Intel. However, a deal here is equally unlikely.
We wrote last Sunday that Qualcomm’s attempt to take over Intel was highly unrealistic. Since then, Apollo Global Management has come forward to make a possible $5 billion investment. It serves as a potential band-aid to stop the bleeding. In any case, the news has helped Intel’s stock climb out of its darkest depths of just over $20 a share.
Now Bloomberg reports that Intel has explicitly said “no” to a takeover of its own design division. That would leave only Intel Foundry, the manufacturing side of the business, an autonomous entity. The latter is a huge financial burden and is now a subsidiary of Intel Corporation. This construction is designed to allow outside investment for the Foundry business.
Intel bites off
The cavalcade of interested parties for Intel is mainly due to its historically low stock market value. Suddenly the chip giant of yesteryear is a bargain; we’re not financial specialists, but the shares are really undervalued when compared to those of Nvidia, TSMC, ASML, AMD, Arm and other beneficiaries of the AI hype – Intel has missed the boat a tad but is still well-positioned if it executes on its plans. Still, the situation comes across somewhat like a bunch of real estate agents trying to sell a house that isn’t up for sale in the first place. Aside from the danger of activist shareholders or a hostile takeover, Intel is primarily aiming to recover on its own merits.
CEO Pat Gelsinger’s goal since his return to Intel has been to reinvent the U.S. chip giant. Years of decline were to be replaced by new momentum, in which Intel would both deliver competitive products and lead as a chip manufacturer. To top it off, it entered the GPU market. It has now been practically wiped out there, so it’s unclear if that plan truly ever sticks.
Those goals have since been adjusted, at any rate. However, a change in direction for the Foundry plans is expensive and slow. With all the potential suitprsthat are not for sale, the uproar is incessant. In any case, the cost cuts at Intel are drastic: staff reductions, for example, were accompanied by selling Arm shares.
Also read: Intel launches Xeon 6P and Gaudi 3: pure performance and efficiency?