04:12 PM EDT, 09/23/2024 (MT Newswires) -- A potential takeover of chipmaker Intel ( INTC ) by rival Qualcomm ( QCOM ) is likely to be "impractical" as it would face financial and regulatory obstacles, especially in China, BofA Securities said in a note e-mailed Monday.

Qualcomm ( QCOM ) recently made a takeover approach to Intel ( INTC ), The Wall Street Journal reported Friday, citing people familiar with the matter.

While a potential Intel ( INTC ) acquisition would enable Qualcomm ( QCOM ) to further diversify away from licensing and into adjacent semiconductor markets and position it as the largest semiconductor company in the world, it is expected to see financial and operational hurdles, BofA said in a note to clients.

"(Intel ( INTC )) approaches the market from a different angle than (Qualcomm ( QCOM )), focusing on x86 architecture (versus) Arm architecture, which could be challenging from strategic (and) operational perspectives," BofA analysts Vivek Arya and Tal Liani said in a note to clients.

A potential purchase would be "financially challenging to construct" given Intel's ( INTC ) debt pile of more than $50 billion, the analysts wrote. Qualcomm ( QCOM ) had to terminate its planned acquisition of NXP Semiconductors ( NXPI ) amid regulatory challenges, with a potential deal with Intel ( INTC ) also likely to face a similar fate, according to the note.

A deal with Qualcomm ( QCOM ) could help accelerate some of Intel's ( INTC ) debt pay down by monetizing parts of the latter's stakes in Mobileye and Altera, if the merged entity were to sell parts of Intel ( INTC ) assets as part of the transaction, the analysts said. However, the future of Intel's ( INTC ) x86 products remains "questionable" given Qualcomm's ( QCOM ) focus on Arm-based central processing units, the duo wrote. "We see no near-term change to the current competitive landscape and share loss dynamic of (Intel's ( INTC ) personal computer and server) CPU lineups."

A potential Qualcomm-Intel deal is also likely to face a tough regulatory backdrop, particularly in China, "which historically has taken years to even consider medium-sized transactions," Arya and Liani said.

"Overall, we are skeptical of the merits of any proposed transaction and believe any announcement could create confusion given potential for headcount and roadmap disruptions," the analysts wrote. A potential deal announcement would be "a relative positive" for Intel ( INTC ) rivals, including Nvidia ( NVDA ) , Broadcom ( AVGO ) and Advanced Micro Devices ( AMD ) , allowing them to capture even more market share, according to the note.

BofA maintained its underperform rating on the Intel ( INTC ) stock and buy on Qualcomm ( QCOM ).

Separately, alternative asset manager Apollo Global Management ( APO ) has offered to invest up to $5 billion in Intel ( INTC ), Bloomberg News reported Sunday, citing people familiar with the matter.

Intel ( INTC ) shares closed 3.3% higher on Monday, but have lost nearly 55% in value so far this year. Qualcomm ( QCOM ) shares were down 1.8%, while Apollo rose 0.6%.

Intel ( INTC ), Qualcomm ( QCOM ) and Apollo didn't respond to MT Newswires' requests -- including emails sent Friday -- for comment on the media reports.

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