Intel, the world's biggest chip maker, is considering a bid for Broadcom in a bid to prevent a rival 'chipzilla' from emerging should Broadcom's own bid for Qualcomm succeed.
That's according to the Wall Street Journal, which claims that Intel has been considering making an offer for Broadcom as one of several options in response to Broadcom's hostile bid for Qualcomm.
If Broadcom was successful in its bid to acquire Qualcomm, the combined company would have a valuation of around $220 billion - not far from Intel's own valuation of $245 billion, which means that the combined company would pose a much bigger threat to Intel in the chip market.
The WSJ notes that Intel is concerned that the acquisition, if successful, would create a powerhouse in both smartphones and data centres, two areas where Intel hopes to grow.
Acquiring Broadcom - a market leader in wireless and Bluetooth mobile chips - could give Intel a second chance at success in the mobile market. However, it may prefer to simply break it up.
The report, citing anonymous sources, says that Intel has been considering the acquisition since late last year, adding that the chipmaker might launch a bid for Broadcom regardless of whether it succeeds in acquiring Qualcomm.
However, the WSJ notes that such a deal would be "enormous" and complex and may never happen.
Intel, responding to the rumours, said it does not comment on "rumours or speculation" related to mergers and acquisitions.
"That being said, we have made important acquisitions over the past 30 months — including Mobileye and Altera — and our focus is on integrating those acquisitions and making them successful for our customers and shareholders," a spokesperson added.
This latest twist in Broadcom's efforts to acquire Qualcomm comes after the Committee on Foreign Investment in the United States (CFIUS) has raised concerns about the deal, claiming it would put US national security at risk.
In a letter sent to the boards of both Broadcom and Qualcomm, CFIUS warns the government often probes companies that it thinks may pose a risk to US infrastructure. It mentioned an unnamed "actor", in particular, that it claims poses a risk.
While the companies the letter cites as a security risk are not disclosed in the letter, they are almost certainly Chinese and relate to Qualcomm's development of 5G mobile communications technologies.
"A shift to Chinese dominance in 5G would have substantial negative security consequences for the United States," claimed the letter.
In response to the letter, Broadcom said: "There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development to that end."
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