Analyst: The acquisition of Intel Corporation (INTC.US) by Qualcomm (QCOM.US) is unlikely, but Apollo (APO.US) investing in it is promising.

Although there were reports last week that Qualcomm (QCOM.US) was in talks to acquire Intel Corporation (INTC.US), analysts believe that this deal is unlikely to materialize. At the same time, analysts believe that Apollo Global Management Inc (APO.US) may invest in Intel Corporation. Stifel analyst Ruben Roy stated: "Like other large transactions that have high regulatory hurdles, such as NVIDIA Corporation's acquisition of ARM Holdings, Broadcom Inc.'s acquisition of Qualcomm, and Qualcomm's attempted acquisition of NXP Semiconductors NV, we believe that a Qualcomm-Intel Corporation deal is unlikely to gain regulatory approval." Such an acquisition would allow Qualcomm to enter more semiconductor markets and bring in strategic corporate clients. According to data from Bank of America Corp, this deal would also create the largest semiconductor company in the world, with Qualcomm's revenue at $33 billion and Intel Corporation's revenue at $52 billion. Bank of America Corp analyst Vivek Arya stated: "However, we believe that in a challenging regulatory environment, the challenges outweigh the potential benefits, and the scale/CPU dominance is not favorable for a potential merger between Qualcomm and Intel Corporation." Both companies heavily rely on sales in China. China is Intel Corporation's largest market, accounting for 26% of its revenue in 2023. Meanwhile, about 60% of Qualcomm's revenue in 2023 comes from mainland China and Hong Kong. Qualcomm's sales to Chinese smartphone manufacturers increased by 40% in the first half of the 2024 fiscal year. Bank of America Corp pointed out that Intel Corporation has over $50 billion in debt, while Qualcomm has $13 billion in cash on its balance sheet, making this deal financially challenging. It is worth noting that insiders revealed that Apollo Global Management Inc has considered investing up to $5 billion in Intel Corporation. Wells Fargo & Company stated that the possibility of Intel Corporation and Qualcomm merging is low, but Apollo's "equity-style investment" is much more feasible. Wells Fargo & Company analyst Aaron Rakers stated: "We believe that Apollo's investment will send a positive signal; however, the extent to which existing shareholders' equity is diluted will be a key consideration. It is worth mentioning that in June of this year, Intel Corporation and Apollo announced an agreement: Apollo will lead an investment of $11 billion in Intel Corporation's Fab 34 factory in Ireland; Apollo will receive a 49% stake in the joint venture."