Rumors are going around the market about Intel’s next move, as names of big techs, such as Qualcomm, have been brought up as potential buyers. On the other hand, U.S.-based asset management firm Apollo is also said to be showing interest in making an equity-like investment worth up to USD 5 billion in Intel.

However, are the rumors making sense? What would be the wisest decision for Intel to make? Here’s a roundup of the semiconductor giant’s core businesses, and a quick analysis of its next steps.

Intel Might Be Working on Restructuring and Adjustments Months ago

Before Intel’s formal announcement of delaying its German project for two years, the company has actually been carrying out plans for restructuring discreetly and adjusting its strategy in the meantime, which can date back to months ago.

This could be further echoed with Intel’s decision in June to sell a 49% equity interest related to the Fab 34 in Ireland to Apollo. Then, in July, after reporting a loss of USD 7 billion in its manufacturing business for 2023, Intel stated that its investment in France and Italy could not be realized for the time being, and suspended relevant investment plans for chip plants and R&D centers.

Five Core Businesses to Watch: x86 Unlikely to be Sold

Still, the struggling giant has five core businesses, which consists of the following segments: x86 CPUs for the consumer and data center markets, the networking business, Intel Foundry Services (IFS), FPGA unit Altera and Mobileye for automotive driver-assist systems.

Among these, x86 CPU remains the most profitable segment, which is also Intel’s core strength. As the revenue contribution, gross margin, and operating margin of the product line stay healthy, Intel is unlikely to sell the segment in the current scenario.

On the other hand, though Intel has denied the plan to divest a majority stake in Mobileye last week, the self-driving company, which listed on Nasdaq in 2022, would be one of the easiest target for Intel to handle. Industry insiders believe that companies like Japanese semiconductor firm Renesas, U.S. chip giant Qualcomm, Taiwan-based MediaTek, or those aiming to enter the automotive electronics sector could be potential buyers.

As for Altera’s FPGA unit, which also previously denied rumors of being for sale, industry experts suggest that AMD could still be a potential buyer. Acquiring Altera would allow the U.S. chip giant to expand its FPGA product lineup, effectively integrating it with its existing portfolio.

In addition, the networking division could also be sold as a standalone entity, which might be easier for Intel to execute.

What is Qualcomm Eyeing for?                       

The latest reports by The Wall Street Journal and Bloomberg indicate that Qualcomm has reached out to Intel regarding a potential acquisition offer, which would rank as one of the largest-ever technology mergers if the deal were to take place.

However, if Qualcomm were to pursue the x86 business or the entire Intel, it would be a significant financial burden for the U.S. chip maker. Moreover, as a chip design company, Qualcomm would lack the expertise to manage the IFS foundry, while the sector still suffered from significant losses.

Additionally, the deal would require scrutiny from antitrust authorities in various countries, which could be particularly challenging in China.

Therefore, a more feasible option for Qualcomm would be to acquire Mobileye, as the company is already involved in automotive ADAS and infotainment ICs. Acquiring the networking division would be another reasonable choice.

What would be the next page for Intel? To sum up, the 56-year-old semiconductor giant still has solid products, such as the x86 CPUs. Its main issue lies in the slightly deviated strategic direction and execution over the past few years, particularly as it positions itself to compete with TSMC in the most advanced nodes. By addressing these missteps and making proper arrangements afterwards, the company still holds significant value.

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• [News] Qualcomm’s Potential Takeover of Intel Might Have Minimal Impact on TSMC, But Not MediaTek
• [News] Update on Potential Investors of Intel: Apollo Rumored in; Broadcom Temporarily out

(Photo credit: Intel)

After Intel settled down plans for restructuring last week, revealing schemes to transform its foundry business into an independent unit with its own board, some potential buyers have been reportedly emerged. After Qulacomm’s rumored proposal of a friendly takeover, latest reports by Bloomberg and Reuters note that U.S.-based asset management company Apollo has recently expressed interest in making an equity-like investment worth up to USD 5 billion in Intel.

However, another U.S. chip giant Broadcom, which had earlier been exploring the possibility of pursuing such a deal, is said not actively considering an offer for Intel at the moment, Bloomberg suggests.

Citing sources familiar with the matter, Bloomberg notes that advisers are still presenting ideas to Broadcom. However, a spokesperson for Broadcom declined to comment.

It is worth noting that in 2018, Broadcom’s planned acquisition of Qualcomm was blocked by the U.S. government due to national security concerns. A potential deal between Broadcom and Intel would likely encounter similar regulatory hurdles.

On the other hand, U.S.-based asset management firm Apollo is said to shown interest in making an equity-like investment of several billion dollars in Intel, while the struggling giant is currently considering Apollo’s proposal, according to Bloomberg and Reuters.

The discussions, though, are still in the early stages and no agreement has been reached, the reports indicate.

This is not the first time Apollo has shown its interest in Intel. Earlier in June, the buyout firm and Intel announced a definitive agreement under which Apollo-managed funds and affiliates will lead an investment of USD 11 billion to acquire from Intel a 49% equity interest in a joint venture entity related to Intel’s Fab 34.

According to Apollo’s press release, located in Leixlip, Ireland, Fab 34 is Intel’s leading-edge high-volume manufacturing (HVM) facility designed for wafers using the Intel 4 and Intel 3 process technologies. To date, Intel has invested USD 18.4 billion in Fab 34.

Read more

• [News] Qualcomm Rumored to Consider Acquiring Parts of Intel’s Chip Design Business, with a Focus on PC Segment
• [News] Qualcomm’s Potential Takeover of Intel Might Have Minimal Impact on TSMC, But Not MediaTek

(Photo credit: Intel)

One of the most critical moves of Intel’s next step, regarded by CEO Pat Gelsinger as “the most significant transformation in over four decades,” is turning its foundry business into an independent subsidiary. Citing remarks from foreign media and analysts, a report by Taiwanese media outlet Anue notes that this is a much-needed temporary measure aimed at gaining the trust of potential customers, who may hesitate to entrust their chip designs to a competitor’s foundry division.

Following last week’s board meeting, Intel announced on September 16^th that the company will transform its foundry business into a wholly-owned subsidiary with its own board of directors.

It is worth noting that in the meantime, Intel signed a multi-billion-dollar, multi-year agreement with Amazon to produce certain chips for Amazon Web Services’ (AWS) AI data centers.

The Two tech giants will co-develop AWS’ next-gen AI fabric chips on Intel 18A, which signals a good start for Intel. Additionally, Intel is developing customized Xeon 6 server chips for AWS.

Regarding Intel’s plan on carving out its foundry business, citing comments from foreign analysts, the report by Anue states that the move could help Intel in having a better chance of attracting tech heavyweights, such as Apple, Qualcomm, Broadcom, and even AMD.

Here is why: if the new company appears as an independent entity and if it has the right board members, the foundry business could progress more smoothly, the report suggests. This move should help alleviate concerns from potential customers, but its effectiveness will yet be proven through execution.

The report added that if Intel’s collaboration with Amazon goes well, it could potentially manufacture other Amazon chips in the future, such as AWS Graviton processors and Trainium AI training chips used for machine learning.

Intel has failed to attract a significant number of clients for its foundry business, with Microsoft being its largest customer to date, the report notes.

Two years ago, the struggling giant lost the contract to design and manufacture chips for Sony’s next-generation PlayStation 6, dealing a major blow to its efforts to establish its nascent foundry business.

In its own words, the move in terms of the new subsidiary structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

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• [News] Intel Reportedly Sought Commerce Secretary Raimondo’s Help over U.S. Reliance on TSMC
• [News] Intel to Turn Foundry Unit into Subsidiary, with Projects in Germany and Poland Delayed for 2 Years

(Photo credit: Intel)

According to a report from The Register, DPU developer Xockets recently filed a lawsuit, accusing AI chip giant NVIDIA, Microsoft, and intellectual property risk management company RPX of colluding to avoid paying Xockets the fees it is owed, violating federal antitrust laws, and intentionally infringing on its patents.

The report states that in addition to seeking monetary compensation, Xockets is also requesting an injunction. If granted, this injunction would prevent NVIDIA from selling its upcoming Blackwell architecture GPUs.

Per Reuter’s report, Xockets, founded in 2012, claims that its invention, the Data Processing Unit (DPU), plays a critical role in some of NVIDIA’s and Microsoft’s systems. The company states that its technology helps offload and accelerate tasks that would otherwise place a heavy burden on server processors.

Reportedly, Xockets founder Parin Dalal began filing a series of DPU technology patents in 2012. These patents describe architectures used for the linear downloading, acceleration, and isolation of data-intensive computational operations from server processors.

Xockets claims that its DPU-related patents cover various applications including cloud computing, machine learning, security, network overlay, stream data processing, and cloud computing architectures. Xockets alleges that Microsoft and Mellanox, which was acquired by NVIDIA in 2020, which was acquired by NVIDIA in 2020, have infringed on these patents.

In a recent statement, Xockets claimed that NVIDIA has utilized DPU technology patented by Xockets, allowing NVIDIA to monopolize the AI server market using its GPUs. Meanwhile, Microsoft has allegedly monopolized the AI platform market using NVIDIA GPUs.

Xockets further claimed that it has made effort to engage in sincere negotiations with NVIDIA and Microsoft, but these attempts have been rejected.

Xockets’ lawsuit reveals that it actually demonstrated the relevant technology to Microsoft in 2016, and the technology was subsequently adopted by Mellanox within the same year for cloud computing downloads used by Redmond and other clients.

Additionally, NVIDIA’s ConnectX smartNIC, BlueField DPU, and NVLink switch, which are crucial for extending AI training and inference deployments across large GPU clusters, are said to infringe on Xockets’ patents.

Regarding this matter, NVIDIA has declined to comment, while Xockets’ spokesperson has also not provided any additional explanation.

The report highlights that Microsoft and NVIDIA may not be Xockets’ only targets but are at least the most profitable ones. Other companies, such as Broadcom, Intel, AMD, Marvell, Napatech, and Amazon, are also actively developing products similar to NVIDIA’s ConnectX, BlueField, and NVLink.

Regarding the lawsuit, the judge overseeing the case has approved a preliminary injunction hearing to be held on September 19.

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• [News] NVIDIA’s Blackwell Overcomes Delays, as GB200 Reportedly Sets for December Mass Production
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(Photo credit: Xockets)

Intel has outsourced the production of its Lunar Lake processors to TSMC. According to a report from Commercial Times, due to recent setbacks in Intel’s wafer foundry business, the company has decided to outsource all sub-3nm process manufacturing to TSMC.

The company is also said to be implementing a global 15% workforce reduction plan in an effort to reverse its decline. However, industry sources also reveal that the layoffs are primarily targeting the foundry business, while Intel’s Taiwan branch remains unaffected to maintain production partnerships with local chip manufacturers.

Intel remains committed to its wafer foundry business, as it reportedly released the 18A process design kit (PDK) to IC manufacturers in July.

However, recent reports indicate that Broadcom has expressed concerns about the feasibility of Intel’s 18A process, concluding that it is not suitable for mass production. A Broadcom spokesperson cited by the report has indicated that it is currently evaluating Intel Foundry Services’ products and services, though no final assessment has been reached yet.

Industry sources cited by Commercial Times further note that Broadcom has been collaborating with TSMC for many years, particularly in advanced processes below 7nm, positioning itself as a key player and securing a spot among TSMC’s top ten customers.

Looking at Intel’s latest quarterly report, its foundry business posted a loss of USD 2.8 billion, with an operating profit margin of -65.5%. The company acknowledged that the ongoing expansion of its Intel 4 and Intel 3 facilities in Ireland, along with increased R&D and startup costs for advancing its technology development, will impact profitability.

This has thus underscored the significant challenges Intel faced in achieving both technological breakthroughs and mass production in the semiconductor industry.

Intel is cutting costs and driving efficiency while actively pursuing transformation. The company aims to save USD 10 billion by 2025, even halted dividend payments—a move not seen in 30 years.

Additionally, its global expansion efforts have slowed. As per a recent report from Malaysian media outlet The Star, citing informed sources, it’s reported that Intel will temporarily halt its new chip packaging and testing project in Penang as part of cost-cutting efforts.

Read more

• [News] Amidst Rumors of Germany Plant Delay, Intel’s Penang Project Also Reportedly on Hold
• [News] Intel’s 18A Reportedly Runs into Trouble with Broadcom, while 20A Plan on Arrow Lake Cancelled

(Photo credit: Intel)