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The past couple of weeks have been a whirlwind for Intel (INTC) and its shareholders amid a flurry of headlines, including reports that the chip maker may turn its Foundry business into an independent subsidiary. As consequential as that news was, an even bigger possibility is brewing. Last Friday, the Wall Street Journal reported that Qualcomm (QCOM) has approached INTC about making a friendly takeover deal that would amount to the largest technology deal in history. 

Shares of INTC, which had rebounded earlier in the week after disclosing a major new Foundry win with Amazon (AMZN) Web Services, jumped higher on Friday afternoon following the WSJ story, while QCOM moved lower. Given INTC's struggles, especially in the data center market where it has fallen miles behind NVIDIA (NVDA) and Advanced Micro Devices (AMD), and the company's massive capital needs as it expands its U.S. manufacturing capacity, it's easy to understand the market's apprehension. Furthermore, QCOM is already contending with its own challenges as its core handset market remains in a slump.

• On the plus side, an acquisition of INTC would instantly transform QCOM into a leader in the PC and laptop markets via INTC's x86 chips. A key component of QCOM's strategy is to diversify its revenue streams and lessen its dependence on the very seasonal handset market and a buyout of INTC would turbo charge those diversification efforts.
• The issue, though, is that QCOM is already breaking into the notebook PC market with its competing Arm-based (ARM) Snapdragon CPUs. In fact, QCOM has been gaining momentum here and is well-positioned to benefit as more AI-powered capabilities are released, so completely upending the PC business through an acquisition of INTC would likely be hard for some shareholders to understand.
• A tie up between QCOM and INTC would also invite a huge amount of regulatory risk and uncertainty. It seems highly unlikely that the FTC would rubber stamp a deal between two of the largest semiconductor companies in the world, especially when the government is already tightening the screws on tech giants like Alphabet (GOOG), Apple (AAPL), and Meta Platforms (META) due to competitive concerns. Regulatory uncertainties would hang over both stocks for many months, while also providing a distraction that could cause executives at both companies to take their eyes of the ball.
• QCOM isn't the only company that's taken an interest in INTC. This morning, Bloomberg reported that Apollo Global Management (APO) has made an offer to invest as much as $5.0 bln into INTC in exchange for equity. That's more good news for INTC as the capital infusion not only represents a vote of confidence in the company's future, but it also could bolster its manufacturing expansion investments.

The main takeaway is that a blockbuster deal between QCOM and INTC seems improbable due to both strategic and regulatory reasons, but the expression of interest from QCOM and APO is another positive development for INTC.