Should Qualcomm Buy Intel?

Intel Corporation is struggling with high costs, a weak balance sheet, and declining market share, making it a potential acquisition target for more profitable chip companies.

Qualcomm Incorporated, with strong free cash flows and better management, could be interested in acquiring Intel, but the deal poses significant risks and complexities.

A stock-for-stock deal would result in substantial dilution and lower earnings per share for Qualcomm, making the acquisition unattractive for QCOM shareholders.

Regulatory hurdles are high, and the FTC is likely to oppose such a large deal in the semiconductor space, further reducing the likelihood of a successful acquisition.

Regulatory hurdles, including CHIPS Act funding, and Qualcomm's lack of foundry expertise make the acquisition impractical.

Additionally, Intel's valuation is extremely low at the moment, making it all the more unlikely that management will accept a bid.

Intel's valuation appears overestimated; DCF analysis suggests a target price of $5 per share, far below current market cap.

Aside from the unrealistic $90 billion price tag, the merger is likely to encounter significant regulatory, financial, and integration challenges.