(Bloomberg) — Qualcomm will likely wait until after the U.S. presidential election in November before deciding whether or not to pursue a bid for Intel, people familiar with the matter said.
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San Diego-based Qualcomm wants more clarity on the new occupant of the White House before deciding its next move because of the impact any future administration could have on the antitrust landscape and America’s relationship with China, according to the people who asked to remain anonymous. Discussion of confidential information is scheduled.
Some people said Qualcomm may choose to wait until after the inauguration of the new US president in January before deciding how to proceed, given the many complexities of a potential deal involving Intel.
The combination of Qualcomm and Intel, whose products are central to the digital framework that underpins daily life — from smartphones to electric cars — is sure to come under intense scrutiny by antitrust regulators in the United States and around the world. This includes China, a major market for both Qualcomm and Intel.
Intel shares fell 3.3% in premarket trading in New York on Wednesday.
Qualcomm made an initial approach to Intel over a potential takeover of its struggling rival in September. In the same month, the company held informal inquiries with China’s antitrust regulators to gauge their position on any potential deal, some of the people said. They said Qualcomm has not received any comments from Chinese authorities, who are waiting to see whether the company will actually make a formal offer.
Intel is at the heart of the US government’s plan for a domestic chip industry renaissance, making political support for any deal crucial. The Biden administration has consistently identified the importance of its chipmaking policy in terms of national security. Intel is on track to get the largest allotment of funding under the Chips and Science Act of 2022, if it goes ahead with all its factory construction plans. Qualcomm has spoken with US regulators and believes an all-US group could allay any concerns, people familiar with the matter previously said.
Making a bid after the election could bring other benefits to Qualcomm. Intel will report third-quarter earnings later this month. If that follows the pattern of a disappointing announcement three months ago and impacts the potential target’s stock price, it could make the deal much less expensive for Qualcomm. This time, analysts expect another net loss of more than $1 billion for Intel.
Qualcomm’s deliberations are ongoing and there is no certainty that the company will decide to pursue an offer for Intel and the timing could change, the people said. Representatives of Qualcomm and Intel declined to comment, while China’s State Administration for Market Regulation did not respond to requests for comment.
Under CEO Pat Gelsinger, Intel is working on an expensive plan to reshape itself and bring on new products, technologies and outside customers. As part of the recently announced change, Intel intends to spin off its programmable chip division into an independent company and sell shares to the public or find an investor.
Apollo Global Management Inc. offered Making a multibillion-dollar investment in Intel, Bloomberg News reported last month, provides the chipmaker a vote of confidence in its turnaround strategy and a potential alternative to any takeover by Qualcomm.
–With assistance from Liana Baker, Ian King, and Zheng Wu.
(Updates with pre-market stocks)
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