Apollo Global to Invest in Intel If New Deal Succeeds
US asset manager Apollo Global Management has offered to invest up to $5 billion in American chipmaker, Intel. According to Bloomberg, Apollo Global’s investment in Intel comes at a time when Intel is struggling to stay afloat.
In recent days, bidders have been circling Intel after the company registered disastrous financial results in quarter two of this year. Intel reported a $1.6 billion loss in this quarter and announced 15,000 layoffs in the company as part of a strategy to save $10 billion.
Intel’s Struggle
Since the beginning of this year, Intel shares price has dropped by close to 60%. Apollo’s investment in Intel will most likely be in the form of equity.
Last week, the company announced that it was spinning off its processor manufacturing unit, Intel Foundry. Intel made the announcement soon after the unit signed a deal to make Intel AI chips for Amazon Web Services. The announcement gave the company a vote of confidence, causing Intel share prices to rise by 8% following this announcement.
The tech giant also said it was halting construction of two chip factories in Poland and Germany.
Apollo’s Investment in Intel
Intel and Apollo have an ongoing working relationship. Apollo holds a 49% stake in Intel’s Fab 34 factory in Ireland after it invested $11 billion to finance its construction.
Apollo’s attention was captured by Intel’s current financial position. Bloomberg reported that people who are familiar with the discussions between the two firms said Apollo offered $5 Billion to Intel towards the end of last week. Intel executives have been considering Apollo’s offer. However, discussions about the deal are still in preliminary stages.
There is a possibility that the size of Apollo’s investment in Intel may change and that discussions about a deal may fail to materialize. None of the companies has commented about the deal.
Qualcomm’s Interest
Intel’s rival chip manufacturer Qualcomm has been eying Intel for a takeover. The company approached Intel to discuss a possible takeover on Friday, September 20. Though Qualcomm is yet to place a formal bid, its CEO, Cristiano Amon is leading the negotiations.
Qualcomm was previously interested in buying off Intel’s design business. But now it’s going for the entire company. Qualcomm is a fabless chip manufacturer that’s focused on the mobile space. Acquiring Intel would give it manufacturing capabilities and provide it with a pathway into the data center chip market. At the moment, Qualcomm manufactures its devices at TSMC in Taiwan.
Intel and Qualcomm have been caught up in stiff competition in the manufacturing of PC chips. Early this month, Qualcomm unveiled a new AI-powered PC processor. In a bid to overturn Intel’s dominance in the PC processor market.
Intel currently holds huge government contracts. Last week, the company announced that it had signed up to build chips for the US Defence Department worth $3 billion. Intel entered into a preliminary non-binding agreement with the U.S. Department of Commerce in March of this year. This agreement paves the way for the company to receive $8.5 billion in direct funding under the Chips and Science Act.
