The struggling Intel is embroiled in a love triangle

First, we had Bella, Edward, and Jacob. Now the world has Intel, Apollo, and Qualcomm.

And just like in the Twilight franchise, the latter two are fawning over the former. In recent days, Qualcomm has reportedly made an informal takeover offer for Intel, while private equity giant Apollo Global has offered to invest up to $5 billion into the embattled chipmaker.

• Intel, once the world’s most valuable chip company, recently announced it was cutting 15% of its workforce (~15,000 employees) and suspending the dividend it had paid out since 1992 as part of a plan to save $10 billion in costs next year – moves CEO Pat Gelsinger called “some of the most consequential changes in our company’s history.”
• The chipmaker has seen its stock price dive ~57% so far this year, while its market cap has fallen from ~$257 billion at the start of 2020 to ~$96 billion as of yesterday.

What happened to Intel?

From the late 1980s to the early 2000s, Intel was like Shohei Ohtani on a baseball field – straight dominating – in large part due a deal to provide the computing backbone for Microsoft PCs (known as the “Wintel” partnership).

But, as The Great Gatsby taught us, the good times never last forever. Intel was so focused on making chips for computers that it missed the smartphone boom. And it also got surpassed in transistor production by the likes of Taiwan Semiconductor Manufacturing Co. (TSMC) and South Korea’s Samsung.

But another big mistake – perhaps the company’s biggest – occurred over the past few years: missing the AI boom, which paved the way for Nvidia to become the clear winner. For context: Nvidia sells ~$20 billion worth of AI chips each quarter, while Intel will sell ~$500 million over the entire year.

👀 Looking ahead… The deals currently on the table for Intel are:

• Take up to $5 billion in investment from Apollo in exchange for an equity stake.
• Explore a takeover offer from Qualcomm, which could potentially turn into the world’s largest tech deal (Microsoft’s $69 billion takeover of Activision Blizzard is currently #1) – if it’s able to survive regulatory scrutiny, that is.

Also at play: Intel is slated to receive up to $8.5 billion from the CHIPS Act (more than any other company) to help it build factories across the US, and also has its eye on its own potential transactions.