By Edward Lim
Qualcomm’s reported interest in taking over Intel represents a seismic shift in the semiconductor industry. Should it come to pass, it would reshape the dynamics in the space, especially among key players NVIDIA and AMD.
What makes this move more unthinkable (at least until relatively recently) is that in the same year (1985) that Qualcomm was established, Intel was already way ahead and launched the 80386 processor (also known as the 386) in October 1985. The x86 has gone on to be and still is the leading chip for PCs and laptops around the world.
While Intel is still King of the PC and inside many devices, the wind has changed as Qualcomm has grown in leaps and bounds. Intel’s stock price has been floundering with a market capitalisation today of around US$93 billion. On the other hand, Qualcomm has grown to US$169 billion.
The story of Intel is not new. Other market leaders have also struggled in this fast-moving industtry. In the early 1990s, nobody came close to IBM, whose revenue was higher that the rest of the top 10 combined. But, the downsizing trend hit Big Blue and it splintered to four separate business units and is now no longer among the top IT players in the market.
Another example is HP, whose massive appetite in the past included the acquisition of Compaq in 2002. HP struggled and split into HPE and HP Inc in 2015. Again, it is no longer the giant it was before.
A key reason for their fall is the failure to move with the times. The same applies to Intel, which failed to capture a slice of the mobile phone chip pie. And when AI is mentioned, Intel is not a name that comes to mind.
That is fine if it’s x86 chips are still way ahead of the rest but AMD is gaining ground in that space, and NVIDIA is cornering the data centre market with its AI chips.
If successful, Qualcomm’s acquition of Intel would expand its leaderhip beyond mobile technology into the PC and data centre markets. This bold ambition would see it provided a complete stack of semiconductor offerings.
It’s still early stage yet. No formal offer has been made. And of course, the deal would be subjected to regulatory approval. But the potential takeover does underscore the massive change in the technology landscape, and specifically the semiconductor industry.
Entelechy Asia 