Despite being one of the largest firms in the smartphone SoC market, Qualcomm has been seen some trouble recently. Just a few months ago, the firm had considered splitting into separate licencing and manufacturing segments. While that idea silently died a quickly deserved death, it seems like Wall Street still isn’t too happy with the firm’s performance. According to Market Realist, some Wall Street analysts are suggesting that the best course of action would be a merger with Intel, and failing that, one with AMD.
Qualcomm’s troubles stem from a lack of brand recognition and the market failure of the Snapdragon 810. Due to this, the company has seen it’s profits and revenue fall significantly. A merger with Intel would fix some of the problems. First of all, Qualcomm would be able to get access to Intel’s first class fabs. Secondly, Intel brings along its data centre and enterprise connections, a highly lucrative market. For Intel, Qualcomm would provide in-roads into the mobile market, an area Intel ahs had trouble breaking into. Qualcomm would also ensure that Intel is making best use of their expensive fabs.
Unfortunately for Wall Street though, a merger is highly unlikely. First of all, the merger would bring a hoard of anti-trust issues, it being one of the largest tech mergers ever and bringing together the dominant players of their respective markets. The fundamental nature of the struggle of ARM vs x86 also stands in the way, meaning the merged firm would likely have to keep both, negating any benefits of moving into new markets. The ARM side would be stuck in mobile as that is what most customers are using while the desktop/enterprise will continue to use x86 as they are used to that as well. The synergies on paper simply don’t play out in real life.
The only sensible merger would be with AMD, though that would be more of acquisition of the ailing red team. Qualcomm does have enough cash to settle AMD’s debts and give a cash boost but it probably wouldn’t be good for a struggling firm to start throwing money around right about now. AMD does bring the desktop and data centre/enterprise experience though AMD’s marketshare is pretty poor right now. However, the downsides of the ARM/x86 struggle and lack of fabs still remain problems. It remains to be seen if this remains a crazy Wall Street thought exercise or will it actually end up happening.