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In what is considered as a new wrinkle in the quest of Broadcom to acquire Qualcomm, its rival chipmaker, Intel might actually attempt to acquire Broadcom.
According to a report on Friday that was published in The Wall Street Journal, Intel is the biggest PC and server chip company in the world. The company is mulling a bid for Broadcom, a company that produces Bluetooth, Wi-Fi, and other connectivity chips.
The newspaper said that Intel is worried about the power that a combined Qualcomm and Broadcom would possess. The Journal said that as a response, it could make an offer to acquire Broadcom if it seems like Broadcom will succeed in the hostile bid of the company for Qualcomm.
Reportedly, the Journal said that Intel has been considering the acquisition since late last year and is currently working with some advisers. But the paper, citing unnamed sources, said such a deal would be “enormous” and complex and may never happen.
In a statement, Intel said that it does not comment on speculation or rumours that are related to mergers. The company said: “That being said, we have made important acquisitions over the past 30 months — including Mobileye and Altera — and our focus is on integrating those acquisitions and making them successful for our customers and shareholders.”
On the other hand, Broadcom did not immediately respond to a request for a comment on the matter.
Broadcom is a maker of chips for everything that ranges from cable modems to set-top boxes to digital video recorders. The company announced an unsolicited bid amounting to $130 billion for Qualcomm last November.
Qualcomm is the largest maker of chips and processors for phones in the world. It rejected a revised $121 billion buyout last month. Negotiation grew more contentious a few weeks after when Broadcom decreased its buyout offer for Qualcomm to around $117 billion. Thus, making “an inadequate offer even worse.”
Earlier this week, the Cfius, or the Committee on Foreign Investment in the United States, called for an investigation regarding the proposed acquisition of Broadcom of Qualcomm, worrying that the hostile bid could pose a risk to the national security of the United States. Cfius evaluates mergers that could result in a foreign company controlling an American business. The committee usually gets involved after a deal has been struck. However, in this case, Qualcomm requested it to step in earlier.
The combination of the two companies would produce a chip giant that is supplying components to an extended array of electronic gadgets that are found in homes or pockets — and would imply that one major company served as the principal supplier for key components that are used by Apple, Samsung, and other tech giants. It would also pose a threat to Intel, which already has observed its position drop as its core market, PCs, shrinks in favour of mobile devices.
Intel has been making various advancements in mobile devices, including the supply of 4G chips for the latest iPhones. However, it still lags the might of Qualcomm in the wireless market.