The private equity firm Apollo Global Management Inc. is reportedly planning to make a multibillion-dollar investment in Intel Corp., suggesting confidence in the troubled chipmaker’s recently announced turnaround strategy.
In a report on Sunday, Bloomberg cited a person familiar with the matter as saying Apollo is willing to make an “equity-like” investment of up to $5 billion in the semiconductor giant.
The proposed investment comes at a pivotal moment for Intel, which was once the world’s most dominant chipmaker but has since fallen on hard times, with its shares losing almost 60% of their value since the start of the year.
Intel executives are said to be mulling Apollo’s proposal, Bloomberg said. Discussions over the deal are still at an early stage, and the details are yet to be finalized. The size of the investment could yet change, and it remains possible that nothing will be agreed upon, the source told Bloomberg.
There is a recent precedent for the deal. Earlier this year, Apollo gave Intel $11 billion to acquire a 49% stake in the company’s Fab 34 chip manufacturing facility in Leixlip, Ireland, in a deal that would help fund the ongoing development of the site, officials said at the time.
The news comes just days after it was reported that Qualcomm Inc. has also approached Intel, proposing what could become one of the largest acquisitions in the history of the technology industry. The Wall Street Journal said Friday that Qualcomm is looking to buy Intel, which has a market capitalization of over $93 million, outright. It’s very far from certain that a deal could be reached, and there would be numerous regulatory hurdles to overcome, the report added.
If the deal were to go ahead, Qualcomm would reportedly look to sell off a number of Intel’s business units, including its new foundry business.
Intel’s fortunes have dwindled over the last five years or so, thanks in part to its failure to anticipate the rise of artificial intelligence and also because of the emergence of Advanced Micro Devices Inc. as a major competitor in its traditional server and personal computer chip businesses, as well as its inability to compete effectively with Arm Ltd.’s chip designs that many other chipmakers are producing in high volumes.
In fiscal 2023, Intel’s chipmaking business racked up operating losses of more than $7 billion, and in its most recent earnings call, it disappointed investors with results that came in below expectations.
The company has responded by making some drastic changes to its business. One month ago, the chipmaker announced it will lay off 15,000 workers in its largest-ever round of job cuts. Then last week, it announced a plan to spin off the new Intel Foundry unit as a separate business with its own, independent financial structure, ahead of a possible sale in the years to come.