Chip giant Intel is reportedly thinking about buying out indirect competitor Broadcom in order to avoid having to compete directly against a combined Qualcomm and Broadcom, according to the Wall Street Journal. Other options are reportedly on the table, but buying Broadcom would be the most direct, and obviously most costly option on the books. It’s a move that’s possible, but quite unlikely, given circumstances, and would probably be saved for a last resort, if it’s to happen at all. Currently, Broadcom has a number of hurdles to overcome in its fight to take over Qualcomm, not the least of which is Qualcomm’s own resistance to the takeover, and regulatory scrutiny from US lawmakers made wary by a recent wave of large mergers and acquisitions.
If Broadcom manages to take over Qualcomm, Intel will have a powerful direct competitor to deal with just about everywhere except in the personal computing space, an area that it’s trying to diversify away from through a number of recent acquisitions. If Intel does not choose to nip the threat in the bud by simply buying up Broadcom at great personal expense, another possible solution is to continue being aggressive with acquisitions in order to amass a stable of technologies wide enough and a seasoned staff large enough to put up a good fight against the combined companies. Right now, Intel is just starting to get a leg up in the mobile market after the failure of its Atom x86 processors to successfully penetrate the Android space, but the deal with Apple that’s making it all possible is directly threatened by this deal, given Broadcom’s standing with Apple. Likewise, a combined Qualcomm and Broadcom would prove formidable foes in both AI and embedded systems, two areas that Intel is looking at for mass expansion.
Broadcom’s most recent offer for full control of Qualcomm was $117 billion, an amount that actually surpasses Qualcomm’s own current market worth of close to $94 billion. The company also fought back by naming a new director. Even so, Broadcom has been exploring a wide range of options for takeover, including taking over from the inside by buying up majority stock. So far, nothing has managed to move Qualcomm’s directors and higher-ups, leaving Broadcom little choice but to attempt a hostile takeover by any possible means.