In context: With Intel hurt, companies are racing to acquire Team Blue outright or bid for parts of it. So far, Intel has remained committed to its turnaround plan, but some of the deals on the table illustrate just how far Intel has fallen. An example is Arm’s offer to buy Intel’s crown jewel. As expected, Intel rejected it.
Arm approached Intel about acquiring its products division, which develops chips for PCs, servers and networking equipment, according to Bloombergciting a person with direct knowledge of the matter. However, Intel refused and stated that the division is not for sale. Arm was not interested in Intel’s foundry assets.
Intel has fallen rapidly over the past year and is currently the focus of acquisition rumors. Qualcomm, for example, manufactured a takeover offer earlier this month, according to sources familiar with the matter.
Meanwhile, Intel is said to be open to selling spare parts of its operations to recover its financial balance. Its programmable chip division, Altera, which it acquired for $16.7 billion in 2015, is among the assets that could be put up for sale, although CEO Pat Gelsinger recently denied this.
According to Sandra Rivera, Intel is maintaining its initial strategy of divesting a smaller portion of its stake in Altera, with plans to complete the spinoff through an initial public offering no later than 2026. Last year, Intel spun off alter as an independent entity with plans for a future initial public offering.
Arm’s potential acquisition of Intel’s product units could have boosted its diversification strategy into PCs and servers, where Intel chip designs currently dominate. The UK-based company also wants to offer fully developed products, something Intel could have facilitated.
However, the deal didn’t make sense for Intel, which is already implementing strategies to revitalize its business, making it less inclined to sell off a core business line. Additionally, the Blue Team has options: Apollo recently indicated that he would be willing to make a stock-like investment up to $5 billion in Intel. Although still pending, the chip giant is also on track to receive $8.5 billion in grants and $11 billion in low-interest loans. via Chip Law government funding.
Even if willing, an Arm acquisition of Intel’s products division would have faced numerous challenges. The deal would likely have faced intense scrutiny from regulatory agencies, particularly given current trade tensions with China. Despite Arm’s larger market cap, Intel’s revenue still dwarfs Arm’s, making such an acquisition unlikely. Given the size of Intel’s product divisions, it’s questionable whether Arm could finance such a large purchase.
Another consideration is the technical challenge of merging Arm’s RISC-based architecture with Intel’s x86 architecture. And finally, Arm’s customers, which include Amazon, Qualcomm, and Samsung, would likely have protested the deal, as it would position Arm to compete directly with them.
