To The Moon

First, limited synergies

• It is well known in the industry that $Qualcomm(QCOM)$ strength is cell phone chips, and PC and AI server chips are Qualcomm's deficiencies.

• $Intel(INTC)$ has a certain advantage in PC chips, cell phone chips have no advantage at all, and AI server chips are also Intel's weakness.

• Therefore, Qualcomm's acquisition of Intel may only help the chip business on the PC side.

And originally Qualcomm has raised capital expenditures, full expansion of the PC and AI side of the ecosystem, the latest quarter of CapEx reached 390 million dollars, in other words, Qualcomm's own investment in this area has been sent to the car.

So if you spend $100 billion to acquire Intel just for PC chips, it's certainly not a particularly cost-effective deal, and Qualcomm's shareholders are certainly divided.Qualcomm's internal attitude towards this acquisition is said to be more negative.

Second, Huge financial blow

From the point of view of the acquisition cost, Qualcomm $190 billion market value, Intel $93 billion, and the acquisition will certainly have a premium, Intel's share price is currently at an all-time low, the bid is too low Intel's shareholders will not agree.

• Qualcomm's cash and equivalents of $13 billion, the entire asset size of $52.7 billion.

• Considering that there are still premiums, acquisition costs, debt issuance, etc., the financial pressure brought by the forced acquisition is extremely high, and will greatly damage the existing balance sheet structure.

What's more, Qualcomm's current net interest rate of more than 20%, due to the acquisition of Intel, a redundant loss-maker, profit margins may drop directly to single digits, or even losses.

In addition, the acquisition of such a behemoth as Intel may require the sale of some assets to other companies in the industry, which is also equivalent to the dismemberment of Intel.

• Such a sale may not be completed at a fair price, and may even involve the sale of some high-quality assets.

• Even if Intel and Qualcomm board of directors agreed, whether the national regulatory permit is still unknown

Third, needs AMD’s permission

$Advanced Micro Devices(AMD)$ and Intel between the existence of a dating back to 2009, x86/x86-64 cross-licensing patent agreement, so that the double reverse in their respective products to use each other's patented technology, to a certain extent, to share technological advances.

But this agreement provides for termination in the event of a change of control of Intel or AMD.

So, unless AMD agrees, any company that acquires Intel won't be able to produce Intel-designed x86-64 processors, which is the same as scrapping Intel's strongest PC-side chips.There is absolutely no need for Qualcomm to acquire Intel if it can't reach a settlement with AMD.