Are Intel’s days numbered? That is the question for those who have been watching the decline of the once-dominant chip giant to an also-ran in the semiconductor industry, overtaken by rivals in new markets.
Chief executive Pat Gelsinger has been working on a comeback plan that would turn around Intel’s fortunes, transforming it into a player in the foundry sector – signing up outside customers and bringing in new products and technology. But that is a slow process, and has led to a run of gloomy earnings reports that have knocked tens of billions of dollars off Intel’s market value.
The end result is a round of redundancies and cutbacks, a move that has hit close to home given Intel’s significant investment in Ireland.
There have been some wins. Intel recently landed Amazon.com’s AWS as a customer for the company’s manufacturing business. That follows Microsoft’s announcement in February that it would use Intel for some of its in-house chips. At the same time it is postponing new factories in Germany and Poland.
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The industry has sensed the blood in the water. Rival chipmaker Qualcomm has been mooted as a potential suitor for Intel, with reports citing unnamed sources claiming that the company has approached Intel about a possible deal. If it came to pass it would be one of the biggest ever M&A deals.
But it would have to pass muster with competition authorities, which could be a tough sell in an environment where big tech and its power is coming under increased pressure. In the US there have been increasing calls to break up some of the larger more influential tech companies; in the EU regulators have taken action to rein in the largest players in the market. A merger of this size, even taking Intel’s faltering profile into account, will be closely scrutinised.
On Monday another player entered the field. Apollo Global Management, which already owns 49 per cent of the Intel plant in Co Kildare, is reportedly considering an offer of its own – a multibillion-dollar investment that would be seen as a vote of confidence in the chipmaker. It may take more than that to keep Intel in the game.
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