Now that Qualcomm’s interested, will Apple buy (a little more) Intel?

Qualcomm is allegedly sniffing at the beleaguered remains of Intel and may try to acquire parts of the company. Will Apple make its own counterproposal?

Apple’s decision to abandon its processors in favor of Apple Silicon reflected a wider malaise. Try as it might, Intel found itself unable to accelerate processor development to the same extent as Apple found it could with ARM-based Apple Silicon chips, and what began as a jubilant relationship expired. Intel had saved Apple from the PowerPC chip disaster but couldn’t keep the pace with modern mobile processors.

The rest, as they say, is history.

Intel shudders, Qualcomm ascends

Qualcomm, meanwhile, knows a good idea when it sees one and has been dancing in Apple’s shadow with its own move to manufacture ARM-based processors. Those fast chips are picking up vendor sales at Intel’s expense. 

But it seems Qualcomm wants to take things a step further, which is why it has been exploring the possibility of acquiring parts of Intel’s design business, particularly the PC design business. 

A deal has not been reached — Reuters tells us Intel says it is “deeply committed” to its PC business — and Qualcomm hasn’t approached Intel to discuss its plans. In other words, all or none of this could be true.

The Apple connection

In context, Intel is encountering tough headwinds, prompting deep layoffs and a pause in dividend payments. The company’s PC client business declined 8% last year, reflecting weak PC sales across the board.

Apple’s Mac sales kicked against this trend, increasing 20.8% year on year in Q2 against a PC industry average 3% growth — mostly attributable to Apple’s extra million Mac sales.

With Apple expected to introduce incredibly performant M4 Macs this side of Christmas, all of which will be capable of running Apple Intelligence with built-in AI support, Cupertino is counting on its PC sales growth to continue. The company is unique in that it offers a completely compatible range of AI-supporting products in every key form factor (Mac, tablet, smartphone). No one else has this.

Qualcomm competes

Qualcomm wants a slice of that market, too. Its newly introduced Snapdragon processors are winning praise across the PC media for their low power use and high performance (though these still lag behind Apple Silicon in many respects).

All the same, as a business it may well have learned from Apple’s integrated approach to product design. A strategic Intel acquisition would give it an opportunity to begin building its own platform ecosystem, or at least make additional cash through hardware sales on its own account. Though it must be noted that most PCs capable of running AI cost more than some of Apple’s systems (e.g., the Mac mini) that are also capable of doing so.

The myth that PCs are cheaper is an enduring one, but you get what you pay for, and Crowdstrike showed us the risks of that platform.

But why wouldn’t Qualcomm want to grab a larger slice of the PC industry pie?

More than a modem

There is a clear competitive relationship between Apple and Qualcomm. Not so long ago, Apple settled outstanding litigation between the two companies in order to begin using Qualcomm’s 5G chips in its devices. The iPhone manufacturer had hoped to build its own 5G modems with the help of Intel, but that plan didn’t bear fruit.

In the end, Apple acquired Intel’s modem design unit and a big bucket full of related mobile patents for a billion dollars. It’s fair to say modem development has proved a struggle, but Apple is now expected to introduce its first 5G modems as soon as 2025. 

When it does, Apple will no longer be dependent on Qualcomm.

But, given that Qualcomm has its own chip design talent, will Apple want it to emerge as a hardware competitor? What is the risk that some key patents used by Apple may suddenly migrate from Intel to Qualcomm if such a deal does take place? After all, one of the key disputes between both firms has been around patent licensing costs.

All of this is speculation, of course: Qualcomm may never bid for Intel’s PC business. But if it does, and if Apple doesn’t like it, then it may be instructional to note that Qualcomm’s market cap currently stands at $182 billion, in contrast to Intel’s $82.7 billion and Apple’s eye-watering $3.38 trillion.

That difference in financial capital hints at what could be a dramatic bidding war, but almost certainly suggests regulatory investigation whoever seals the deal, if such an event happens at all. 

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