The sky is falling in the semiconductor industry!

Unbelievable, is the global chip giant Intel actually going to be "sold"?

No one expected that Intel, once the leader in chips and a symbol of Silicon Valley's glory, would suddenly face a "great disaster".

For decades, Intel has been an undisputed chip giant in Silicon Valley. Moore's Law laid the foundation for the chip industry and, together with Microsoft, formed the Winter Alliance that dominated the PC era.

The name Silicon Valley became well-known in the 1970s precisely because of the rise of the chip industry led by Intel.

Three years ago, Intel was at its peak, with a market value twice what it is now, and its CEO Pat Gelsinger was looking for acquisition targets;

Three years later, Intel probably never thought that one day it would become the target of acquisition itself.

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From a chip hegemon to a target of acquisition, Intel only took three years, which is really sigh-worthy!

The rapid decline of the Intel Empire, in addition to its own problems, the market's shift towards AI has become the last straw that broke Intel.

In short, at this moment, the fate of this legendary American semiconductor company is like a duckweed, pinning its hopes on the next generation of chip manufacturing technology. Can Intel still "save itself"?Intel, to be "sold out"?

According to multiple media reports, Qualcomm has recently been in contact with Intel and is discussing acquisition matters with them. However, it is currently unclear what Intel's response has been, and no acquisition terms or offers have been disclosed.

Undoubtedly, if the acquisition is successful, it will be one of the largest acquisitions in the history of technology in recent years!

Everyone knows that mergers are the current trend in the chip industry, with companies focusing on developing technology and investors maximizing their profits.

However, such a massive acquisition carries a great deal of uncertainty. Even if both parties are interested, Qualcomm's financial resources on hand are unlikely to cover the huge funding gap required to acquire Intel, and the transaction would also have to pass a strict antitrust review.

It is worth mentioning that several large semiconductor acquisition cases in the past have almost all ended in failure.

In 2017, Broadcom offered more than $100 billion to acquire Qualcomm, but the transaction was ultimately blocked by the U.S. government on national security grounds and failed.

In 2018, the Qualcomm acquisition of NXP, which lasted 21 months, also ended in failure!

Moreover, Qualcomm's cash flow is currently insufficient to fully acquire Intel. Therefore, the most likely scenario at present may be that Qualcomm will acquire a division of Intel, or Intel will take the initiative to split up, which could gradually swallow Intel, allowing Qualcomm to enter the PC market in this way.As the outside world debates the rumors of "Qualcomm initiating a takeover bid for Intel," Intel CEO Pat Gelsinger remains unflustered.

It turns out that a $5 billion windfall is coming to "save the day" for Intel!

After Qualcomm set its sights on Intel for a merger and acquisition, the American private equity giant Apollo Global Management suddenly proposed to invest $5 billion in Intel;

However, Qualcomm fell silent, and Intel felt that it could still be "resuscitated," considering Apollo's proposal.

While everyone is curious whether 2024 will become a new starting point for Intel, they are also surprised at how Intel went from being the chip hegemon to a target for acquisition.

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Once, Intel was like a chip hegemon and the highest-valued chip company in the world.

Starting in the 1980s, Intel dominated the CPU market with its self-created X86 architecture, with global shipments reaching billions of units;

Later, Intel formed an unbreakable alliance with Microsoft's Windows system, dominating the PC processor market.

Over the past few decades, Intel's chips were almost ubiquitous in PCs and servers, whether you were using a Windows system or an Apple system, you had to use its CPU, and they were self-developed and self-produced, which can be described as a monopolistic existence.It is precisely because of this dominant position that Intel has been the undisputed leader in the global semiconductor industry for 25 consecutive years from 1991 to 2017.

In 2000, Intel stood at the pinnacle of the technology wave with a market value of 300 billion US dollars!

It was not until the birth of Apple's iPhone and the global entry into the mobile internet era that mobile processor giants such as Apple, Qualcomm, and Huawei successively emerged, and Intel's throne began to waver.

Before Apple launched the iPhone in 2007, it had sought cooperation with Intel, but was rejected by Intel for the small mobile chip market, and had no choice but to have Samsung manufacture its chips.

After Apple, chip design companies such as Qualcomm and Huawei HiSilicon all aimed at the mobile phone chip business, reaping the benefits of the smartphone boom for 10 years, while the arrogant Intel missed the mobile internet wave.

Even in its most solid PC processor field, Intel has also begun to show cracks.

Monopoly has brought excessive profits to Intel, but has put great pressure on partners such as Apple.

Because Intel processors have always been expensive, in 2020, Apple's Mac finally abandoned Intel and used its own M1 processor based on the ARM architecture.

After Apple abandoned Intel, ARM and RISC-V architectures gradually rose, and some analysts predict that by 2026, the ARM architecture will account for 30% of the PC market share and 50% of the cloud server market share.

In 2007, then-Intel Vice President Gelsinger announced that Intel would launch the Larrabee architecture, which integrates CPU and GPU, and claimed that graphics cards would disappear within two to three years.Unfortunately, the plan turned out to be a joke, and in the end, Intel not only lost to NVIDIA but also gradually "weathered" in the mark of the times.

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The year 2019 seemed to be Intel's last glory, with revenue close to $72 billion (about 503.8 billion yuan), and net profit as high as $21.048 billion, making it the world's highest-grossing semiconductor company.

The fall of a giant is often silent, and Intel paid a heavy price for its complacency!

At the beginning of 2021, when Gelsinger became Intel's CEO, the giant had already lost some of its luster. In cutting-edge chip production, Intel was already lagging behind its Asian competitors.

In just three years, Intel was far behind its former little brothers: NVIDIA's market value exceeded $2.8 trillion, Broadcom's market value exceeded $800 billion, AMD's market value exceeded $250 billion, Qualcomm's market value exceeded $180 billion, and even ARM, which only designs chips, had a market value of more than $140 billion. Intel's market value was only less than $100 billion, which was really too tragic!

The increasingly poor performance is the biggest factor affecting Intel's secondary market performance.

The financial report shows that Intel's revenue in 2022 was $63.1 billion, a decrease of 20% compared to the $79 billion in 22 years; net profit was $8 billion, a decrease of 60% compared to the previous year's $19.9 billion.

In the fiscal year of 2023, Intel achieved a revenue of $54.2 billion, a year-on-year decrease of 14%; the net profit attributable to the parent company was $1.7 billion, a year-on-year decrease of 79%.

In the second quarter of this year, Intel's revenue decreased by 1% year-on-year, and the third quarter guidance decreased by up to 11%, with a net loss of $1.6 billion. Intel has been losing money for two consecutive quarters; Intel announced a $10 billion cost reduction plan, planning to lay off more than 15% (about 150,000 people), most of which will be completed this year; starting from the fourth quarter, Intel suspended dividends for the first time in 32 years...Time flies, and we can't help but sigh that the era when Intel dominated has long come to an end!

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Intel has always relied on computer chips to conquer the world, but it has never been able to seize the opportunity of the mobile Internet.

Now major mobile phone manufacturers, such as Samsung, Apple, and Huawei, either use self-developed chips or use chips from Qualcomm and MediaTek, with no involvement from Intel. The PC side is completely overwhelmed by NVIDIA, missing out on the dividends of an entire era. It's fortunate that Intel has a deep foundation to fall back on.

Intel is currently facing declining performance and transformation challenges. Its financial restructuring of its foundry business has exposed long-term losses, and its stock price has plummeted. Although Intel still leads in the PC and data center markets, its profits are declining, and new business growth is weak. In particular, the wafer foundry business, although seen as a long-term strategy, currently has a low revenue share and severe losses.

In summary, Intel's predicament mainly stems from misjudging market trends and unclear strategies, as well as stubborn adherence to the x86 architecture.

For a long time, Intel's x86 architecture and Qualcomm's Arm architecture have been "loving and hating each other" in the chip market. The x86 architecture dominates the PC field, while the Arm architecture has an advantage in mobile devices.

With the collapse of the Intel empire, this decades-long competitive landscape has completely changed, and Qualcomm may gain stronger competitiveness in the PC market.

Industry insiders say, "Intel's mobile products have failed, AI is in the investment period, and the data center server market originally had more than 90% of the market, but cloud computing (with a large demand from mobile devices) has raised the chips of competitors in the ARM series.

With the widespread application of Chromebooks, the notebook market is also being eroded. Therefore, if chip design can merge with Qualcomm, it is also a way out."It is worth mentioning that as soon as the news of Qualcomm's intention to acquire Intel broke, Intel's stock price quickly rose, while Qualcomm's stock declined slightly.

Technology companies can only establish a deep moat by continuously breaking through technological barriers.

The founder of Intel once proposed the famous Moore's Law: the number of transistors that can be accommodated on a chip will double every 18 months, and performance will also double.

With Intel's technological innovation capabilities over the years, it has long deviated from the trajectory set by Moore's Law, and being overtaken by others is just a matter of time.

TSMC has always been running on the trajectory of Moore's Law, and the result is that its orders are still booming.

NVIDIA's Huang Renxun felt that this was not fast enough, so he proposed a "Huang's Law": NVIDIA's core strategy is to upgrade its products every 6 months and double their functionality.

From the results, NVIDIA's technological iteration speed has indeed surpassed Intel.

NVIDIA's GPU performance has increased by 25 times in 5 years, while Intel's processor innovation has become increasingly low, jokingly referred to as the "toothpaste factory."

NVIDIA not only surpassed Intel in terms of technological iteration speed, but also successfully surpassed Intel in 2020, becoming the largest chip company in the United States.

As the GPU versus CPU battle gradually gains the upper hand, a new era belonging to AI has begun!However, the rapid development of technology nowadays has led more and more people to believe that the world has already crossed the critical point defined by AI. Who will define the future is something we can only observe as we move forward.