Intel: Trouble Draws Private Investors Like Vultures To A Wounded Giant

Comment Apollo Global Management has reportedly proposed a $5 billion investment in Intel. Rumors are swirling about the chip giant exploring a potential deal with the US-based asset management heavyweight, but nothing is locked in yet.

This news arrives hot on the heels of Friday's big revelation about Qualcomm sniffing around Intel for a potential takeover. The mobile chip giant that once made Intel look like it missed the train is now allegedly interested in taking over, with reports suggesting head honcho and CEO Cristiano Amon is personally involved in the discussions.

Before investors get too excited, we need to revisit the realms of antitrust law and politics. Both could stomp on dreams of a big takeover fast, especially when global regulators are flexing their muscles against Nvidia, Microsoft, and others amid calls for them to be investigated for allegedly abusive or monopolistic business practices.

Talk of Qualcomm's flirtation with the chip giant isn't new; multiple sources several weeks back claimed the mobile chip designer had been eying parts of Intel's business, meaning there'd be more than one potential suitor looking to feast upon what was once the biggest of the chipmakers.

Last month, Intel announced plans to axe more than 16,000 jobs, slash capital expenditures, and put its dividend on ice. CEO Pat Gelsinger, a man who has been busy with one "transformation plan" after another, hinted at a restructuring in a lovely little email last week. Apparently, this includes spinning off its foundry business into a separate entity – you know, the part of Intel that's still trying to figure out how to compete with Taiwan's TSMC, which already gobbled up most of the market.

With all the potential interest in taking over, or investing capital, who knew Intel was suddenly so desirable? There are certainly some out there who might think there are vultures circling the proverbial weakened silicon rhino, as with all the recent layoffs and with CEO Gelsinger looking to steer the ship to safety, Intel isn't in as strong a position as it was a decade ago.

Despite recent efforts, Intel's share price has been doing its best impression of a brick being dropped into the Mariana Trench with shares down nearly 60 percent this year alone.

As far as the potential investment goes, it's hoping Apollo – or Qualcomm, or anyone, really, will swoop in with a large bag of cash and a winning strategy.

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Apollo Global Management is a leading global investment firm that specializes in private equity and asset management. Essentially, they're the kind of folks who show up when the chips are down, which is quite literally in Intel's case.

Think of them as the private equity world's equivalent of vultures (yes, it seems that way right now) – they circle struggling companies, inject cash, and then either feast on the returns or quietly strip the carcass for parts.

In a sense, Apollo has already sunk its teeth, or should we say beak, in Intel. In June, the private equity firm plowed $11 billion into Intel in exchange for a 49 percent stake in the chipmaker’s Irish fabrication plant. The deal mirrors a similar arrangement reached by Brookfield Asset Management and Intel in mid 2022 to fund its Arizona foundry expansion.

As the reports suggest, discussions are currently ongoing, with Intel apparently considering the offer, which is reported to be up to $5 billion, but of course, neither Intel nor Apollo is currently commenting on anything pertaining to the investment.

Whether Apollo is angling for a bigger stake in Intel’s foundry business, perhaps its Ohio chip fabs; trying to prevent its exiting investment from going sour; or vying for something else remains to be seen.

So, would Qualcomm actually buying Intel be a good thing? Well, this depends on your perspective. For Qualcomm, it's a no-brainer with Intel's foundry business in the mix as it would certainly strengthen them in areas they haven't yet managed to succeed in. As for Intel, it's a message that they are no longer the big cat in the industry.

Unfortunately, some issues became apparent as far back as Brian Krzanich's stewardship. When Intel announced Gelsinger as CEO, many felt it was the right move. Putting an engineer at the helm, especially one with an ambitious roadmap, made many feel like Intel was back on track – at least in theory. As The Reg has already pointed out, it is unlikely any Qualcomm-Intel deal will happen as long as Chipzilla continues on its current trajectory and it is more than possible the pair are only having a chat about possibilities. ®