Qualcomm and Intel Move Toward Major Mergers and Acquisitions Shaking Up the Semiconductor Market [AK Radio]

Mobile, PC, and Server Market Turmoil Expected
US Antitrust Law Status a Key Issue

Recently, news has emerged that Qualcomm is attempting to acquire Intel, causing a significant stir across the semiconductor industry. If the merger between these two companies is successfully realized, the landscape of the semiconductor market is expected to change dramatically, significantly impacting the global market and competitive dynamics. Qualcomm is a company that holds an overwhelming position in the mobile market, primarily supplying core chipsets for Android-based smartphones and growing steadily. On the other hand, Intel was once a semiconductor giant dominating the PC and server markets but has faced difficulties in recent years due to declining competitiveness.

Qualcomm has grown since its inception focusing on communication technology. In particular, it developed and commercialized the CDMA communication standard, securing a unique position in the global telecommunications industry. CDMA was the first digital mobile communication method commercialized in Korea, and Qualcomm was able to grow rapidly through this technology. Success in the Korean market became a crucial turning point for Qualcomm, which later served as a stepping stone to expanding its influence in the global market.

Nevertheless, the decisive reason Qualcomm reached its current position is the development of the mobile chipset widely known as ‘Snapdragon.’ Qualcomm’s Snapdragon is a core component of Android-based smartphones, adopted by numerous smartphone manufacturers worldwide. Except for Apple’s iPhone, most high-end smartphones are equipped with Qualcomm chips, establishing Qualcomm as the absolute leader in the mobile semiconductor market. Especially as communication technology and chip performance have steadily improved, trust in Qualcomm chips in the smartphone market has become very high.

Intel is one of the legendary companies in the semiconductor market, once holding a dominant position in PC and server chipsets. Intel led the desktop and laptop markets based on the x86 architecture and built a strong presence in high-performance server chipsets. However, recently, Intel has fallen behind competitors like AMD and Qualcomm due to a lack of rapid performance improvements. Particularly with the advent of the AI era, Intel’s chips have been criticized for heat dissipation issues and performance degradation in markets demanding high-performance computing. Against this backdrop, Qualcomm’s rumored acquisition of Intel has emerged as a significant issue related to their market comeback.

[Image source=Reuters Yonhap News]

The reason Qualcomm seeks to acquire Intel is interpreted as a strategy to expand Qualcomm’s technological capabilities in the AI era and increase its influence in the PC and server markets. Currently, Qualcomm holds a firm position in the mobile market but is also actively pursuing entry into the PC market. Qualcomm is entering the AI PC market, aiming to provide solutions usable across various devices beyond mobile, based on its own chip design. Especially while Intel struggles to enter the mobile market, Qualcomm has continuously improved its chip performance, opening possibilities for use on various platforms beyond Android smartphones.

If Qualcomm acquires Intel, the impact on the semiconductor market will be substantial. The merger of the two companies would mean the birth of a mega semiconductor company dominating the mobile, PC, and server markets, bringing significant changes to the global competitive landscape. Currently, companies like NVIDIA and TSMC are strong in the AI and high-performance computing markets, but the Qualcomm-Intel merger could create a different competitive dynamic. Particularly, Qualcomm’s experience in the mobile sector could complement Intel’s weaknesses, potentially leading to new technological innovations across the semiconductor market.

Qualcomm has attempted several large-scale M&As in the past. A representative case is the 2016 attempt to acquire NXP Semiconductors. NXP, a company spun off from Philips specializing in automotive semiconductors, was targeted by Qualcomm to enter the autonomous vehicle and IoT (Internet of Things) markets. However, this acquisition was blocked by Chinese authorities. China judged that the combination of Qualcomm and NXP could create excessive dominance in the semiconductor market and refused to approve the acquisition. This case demonstrates how bold and innovative Qualcomm’s M&A strategy is. Although the NXP acquisition failed, Qualcomm has continued efforts to pioneer new markets.

The merger of Qualcomm and Intel could have a significant impact not only on the semiconductor industry but also on the global economy and politics. The stance of the U.S. government is particularly important. Qualcomm previously blocked Broadcom’s hostile takeover attempt with the help of the U.S. government. At that time, the Trump administration linked the semiconductor industry to national security and strongly opposed Qualcomm being acquired by foreign capital. This Qualcomm-Intel M&A attempt also requires U.S. government approval, with antitrust law application being a critical issue.

[Image source=Reuters Yonhap News]

Additionally, the reactions of European and Chinese governments to this merger are closely watched. Since the semiconductor industry plays a vital role in each country’s economy and security, if the Qualcomm-Intel merger is allowed, it is highly likely that regulations and sanctions will follow. In the past, during NVIDIA’s attempt to acquire ARM, the European Union and China strongly opposed the deal, judging it could limit competition in the semiconductor market. The Qualcomm-Intel merger may face a similar situation.

Korea’s semiconductor industry is also closely monitoring the Qualcomm-Intel merger. Samsung Electronics and SK Hynix have strong competitiveness in memory semiconductors, but competition with global companies like Qualcomm and Intel is fierce in the system semiconductor field. Especially, Samsung Electronics has been a key partner of Qualcomm, producing Qualcomm chips, and if Qualcomm acquires Intel, this cooperative relationship could change significantly. Qualcomm is a fabless company focusing on design without its own foundry, so how it utilizes Intel’s manufacturing capabilities could alter its relationship with Samsung Electronics.

If Qualcomm’s acquisition of Intel is successfully completed, it could be more than just a merger of two companies; it could mark the starting point of new technological innovation leading the AI era. Currently, the semiconductor industry is experiencing a surge in demand for new technologies in various fields such as AI, autonomous driving, and 5G communication. The Qualcomm-Intel merger will play an important role in responding to these changes. Furthermore, Qualcomm could strengthen its technological capabilities by leveraging Intel’s technological assets and patents.

However, whether this merger will succeed remains uncertain. It is likely to face difficulties in antitrust regulations and approval processes by governments worldwide. China, in particular, will closely examine the impact of the Qualcomm-Intel merger on its semiconductor industry and decide on approval accordingly. The European Union is also expected to seek ways to maintain competition in the semiconductor market.

Ultimately, the Qualcomm-Intel merger is an event that could significantly impact the global semiconductor market, and its progress needs to be carefully observed. If the merger is realized, Qualcomm will become a giant semiconductor company dominating the mobile, PC, and server markets, bringing major changes to the competitive landscape and technological development direction of the semiconductor market. However, the outcome may vary depending on regulations and responses from various countries during the merger process, making future developments highly anticipated.

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