Intel’s faltering business is attracting another chipmaker

As Intel INTC looks for options to fix its faltering business, another chipmaker is reportedly interested in buying some of its chip design units.

Qualcomm has looked into buying parts of Intel’s business for months, and most of the interest is in the chip pioneer’s client PC design unit, Reuters reported, citing unnamed people familiar with the matter. The company, which designs chips for smartphones, including for Apple, has not brought its plans to Intel, an Intel spokesperson told Reuters, adding that it’s “deeply committed to our PC business.” Sources told Reuters that Qualcomm hasn’t finalized plans, and interests could change.

Neither Intel nor Qualcomm immediately responded to a request for comment.

Meanwhile, Intel is reportedly working with its longtime investment bankers at Morgan Stanley and Goldman Sachs on options to save its business after missing revenue expectations and seeing its shares fall around 60% so far this year.

This could include splitting its foundry division which designs and manufactures chips, cutting factory projects, and M&A, Bloomberg reported, citing unnamed people familiar with the matter. Potential options will reportedly be presented at a company board meeting this month. However, people told Bloomberg, the talks with bankers are in their early stages.

In August, Intel saw its shares fall 27% after missing revenue expectations for the second quarter. Intel reported revenue of $12.8 billion in the second quarter of 2024 — down 1% from the previous year. Wall Street had expected $12.9 billion, according to analysts’ estimates on FactSet.

The chipmaker’s missed profit expectations were partly due to its decision to “more quickly ramp” its Core Ultra artificial intelligence CPUs, or core processing units, that can handle AI applications, Intel chief executive Pat Gelsinger said on the company’s earnings call. Gelsinger also announced the company’s plans to cut spending, including by laying off more than 15% of employees.

“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Gelsinger wrote in a memo to employees. “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”