Intel stock (INTC) popped in early trading Monday following a Bloomberg report of a potential multibillion-dollar investment from Apollo Global Management. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
The private equity firm would invest up to $5 billion in Intel, the Bloomberg report said, adding that Intel executives are weighing the offer. The news follows closely on the heels of multiple reports that the chipmaker is considering a friendly takeover by another chip giant, Qualcomm (QCOM).
Intel shares rose 2% early on Monday, after speculation over the Qualcomm deal propped them up by over 3% on Friday.
Qualcomm investors have seemingly been less pleased with the report of talks with Intel. The chipmaker’s shares fell about 3% Friday and were little changed in early trading on Monday.
Intel and Apollo have a preexisting relationship. In June, the chipmaker sold Apollo an $11 billion stake in its Ireland manufacturing facility.
The interest in Intel — and its subsequent stock price boost — is welcome news for a tech company that’s struggled to find its footing in a new AI-dominated market. Intel shares are down nearly 57% from the beginning of 2024. The company said in August it's looking to cut $10 billion in costs by laying off 15% of its workforce and pausing some of its projects in Europe.
Intel has lagged behind rivals Nvidia (NVDA) and Advanced Micro Devices (AMD), whose advanced AI chips have captured the interest of Big Tech to the tune of many billions of dollars.
And Intel’s Gaudi AI processor hasn’t gained steam with the likes of Amazon (AMZN), Google (GOOG), or Microsoft (MSFT). That's because it debuted after the tech giants began working on their own AI chips, Moor Insights CEO Patrick Moorhead told Yahoo Finance in a recent interview.
Meanwhile, a takeover by Qualcomm would be the largest tech merger since Microsoft purchased Activision Blizzard for $69 billion. A deal of such scale would likely capture unwanted attention from federal antitrust regulators, whose scrutiny of the tech industry has ramped up in recent years.
"Similar to other proposed mega-deals that were unable to clear high regulatory hurdles, such as NVDA’s bid to acquire ARM Holdings, Broadcom’s proposal to acquire Qualcomm and Qualcomm’s attempt to acquire NXP Semiconductor ... we believe that a Qualcomm/INTC deal would be unlikely to garner regulatory approval," Stifel analysts wrote in a note to investors Monday.
Even if successful, some analysts say that a Qualcomm merger wouldn't necessarily be good for Intel or its shareholders — and that Intel should get out of the chipmaking business altogether.
"We continue to believe Intel should exit the foundry business in the best interest of shareholders as we believe the company has a very small chance of becoming a profitable leading-edge foundry," Citi analysts wrote in a note on Monday. Intel's foundry business manufactures chips for other companies.
Bernstein senior analyst Stacy Rasgon also told Yahoo Finance on Monday that it would be "hard to do a deal where I think the risk would justify the returns."
Qualcomm's and Apollo’s interest in Intel comes as the company tries to build some of its own momentum too. Last week, CEO Pat Gelsinger announced an expanded, multibillion-dollar partnership with Amazon and $3 billion in CHIPS Act funding from the US government.
"This news, combined with our AWS announcement, demonstrates the continued progress we are making to build a world-class foundry business," Gelsinger said in the announcement last Wednesday.
Laura Bratton is a reporter for Yahoo Finance.
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