1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,040 --> 00:00:11,239 Speaker 2: Qualcom has, it seems to have approached Intel, according to 3 00:00:11,240 --> 00:00:13,960 Speaker 2: people familiar. Again, just a headline from the Wall Street Journal. 4 00:00:13,960 --> 00:00:17,000 Speaker 2: You've got chairs of Intel up about four percent as 5 00:00:17,040 --> 00:00:19,800 Speaker 2: we speak. You've got shares of Qualcomm down about four 6 00:00:19,880 --> 00:00:22,599 Speaker 2: percent as we speak. So let's get to it with 7 00:00:22,720 --> 00:00:26,480 Speaker 2: one of the co hosts of Bloomberg Technology on Bloomberg TV, 8 00:00:26,760 --> 00:00:29,240 Speaker 2: and that is of course Ed Ludlow out there. One 9 00:00:29,240 --> 00:00:30,320 Speaker 2: of the best people we could talk to. 10 00:00:31,280 --> 00:00:35,640 Speaker 3: Ed Ludlow has sat down with interviews of all with 11 00:00:35,760 --> 00:00:40,599 Speaker 3: all the most important CEOs in Silicon Valley, but he's 12 00:00:40,680 --> 00:00:43,479 Speaker 3: especially familiar with Pat Gelsinger. So I think he's a 13 00:00:43,479 --> 00:00:44,559 Speaker 3: great guy to talk to you on this. 14 00:00:44,640 --> 00:00:46,880 Speaker 2: All right, So what do we know? What do you think? 15 00:00:47,440 --> 00:00:50,720 Speaker 4: I think, well, what we know very little. The Journal 16 00:00:50,800 --> 00:00:55,320 Speaker 4: the basics are is reporting, citing anonymous sources, that Quowcom 17 00:00:55,360 --> 00:00:58,600 Speaker 4: made an approach to Intel in the last few days, 18 00:00:58,720 --> 00:01:01,600 Speaker 4: and they state in their report that actually they do 19 00:01:01,640 --> 00:01:04,040 Speaker 4: not have a sense of how receptive Intel is to 20 00:01:04,120 --> 00:01:07,679 Speaker 4: such a deal. The context is that it's out of 21 00:01:07,760 --> 00:01:11,160 Speaker 4: left field. For two reasons. Intel's just gone through a 22 00:01:11,160 --> 00:01:14,400 Speaker 4: massive restructuring, which we can discuss the details of but 23 00:01:14,480 --> 00:01:17,679 Speaker 4: also for Qualcom, it doesn't really make any sense. Historically, 24 00:01:17,760 --> 00:01:21,800 Speaker 4: Qualcomm is a company that designed semiconductors that goes into 25 00:01:21,800 --> 00:01:25,360 Speaker 4: your smartphone. More recently, they've really wanted to move into 26 00:01:25,400 --> 00:01:29,680 Speaker 4: the PC field, which historically Intel has dominated, and Qualcom 27 00:01:29,680 --> 00:01:32,600 Speaker 4: has made inroads into that market with their own technology. 28 00:01:33,280 --> 00:01:34,960 Speaker 4: The thing that we don't know is which bit of 29 00:01:34,959 --> 00:01:37,360 Speaker 4: Intel would Qualcom on paper want to buy. And so 30 00:01:37,400 --> 00:01:39,760 Speaker 4: that's why I bring up those two points, because if 31 00:01:39,800 --> 00:01:42,560 Speaker 4: they wanted Intel's PC business, it would be a departure 32 00:01:42,560 --> 00:01:45,400 Speaker 4: from the strategy so far which has worked. If they 33 00:01:45,400 --> 00:01:49,000 Speaker 4: want the foundry business, that the business of manufacturing semiconductors, 34 00:01:49,160 --> 00:01:51,120 Speaker 4: that's a different kettle official together. 35 00:01:51,160 --> 00:01:54,760 Speaker 3: Well, and are those two businesses going to be separated? 36 00:01:54,960 --> 00:01:58,320 Speaker 3: Is that something that Gelsinger is really considering moving forward on. 37 00:01:58,760 --> 00:02:01,280 Speaker 4: Yes. So the rece news of the week is that 38 00:02:01,400 --> 00:02:05,560 Speaker 4: Intel is going through a second or restructuring or rethink 39 00:02:05,840 --> 00:02:08,600 Speaker 4: under Pat Gelsinger. And the biggest part of that is 40 00:02:08,639 --> 00:02:12,440 Speaker 4: where the foundry business or the manufacturing business is its 41 00:02:12,480 --> 00:02:17,760 Speaker 4: own standalone entity, its own subsidiary, and this subsidiary would 42 00:02:17,760 --> 00:02:22,760 Speaker 4: manufacture semiconductors for Intel. Intel designs chips for PCs and 43 00:02:22,880 --> 00:02:26,120 Speaker 4: for data centers, servers, and a number of other things. 44 00:02:26,400 --> 00:02:30,120 Speaker 4: But it would also manufacture them for third parties. The 45 00:02:30,200 --> 00:02:32,400 Speaker 4: Qualcom story, and again we do not know this. All 46 00:02:32,400 --> 00:02:34,440 Speaker 4: we know is that Qualcom made an approach for Intel, 47 00:02:34,440 --> 00:02:36,400 Speaker 4: and we don't have any of the financial terms that 48 00:02:36,400 --> 00:02:40,560 Speaker 4: were offered. But Qualcom has no experience in manufacturing chips. 49 00:02:40,760 --> 00:02:42,600 Speaker 4: On this show, Carol, I think I've said this to 50 00:02:42,639 --> 00:02:44,480 Speaker 4: you so many times in the last few weeks. Yeah, 51 00:02:44,560 --> 00:02:47,680 Speaker 4: but we call these companies chip makers. They are not. 52 00:02:48,160 --> 00:02:51,280 Speaker 4: They are chip designers and a third party manufactures it 53 00:02:51,320 --> 00:02:54,200 Speaker 4: for them. So maybe Quilcom looks at Intel and goes, 54 00:02:54,560 --> 00:02:57,520 Speaker 4: that would be quite convenient to have our own manufacturing 55 00:02:57,520 --> 00:03:00,520 Speaker 4: footprint here in the United States, because that part of 56 00:03:00,560 --> 00:03:02,120 Speaker 4: Intel's business is kind of humming. 57 00:03:02,240 --> 00:03:05,400 Speaker 1: Well, you know what's funny is the headline initially crossed. 58 00:03:05,400 --> 00:03:07,120 Speaker 1: I'm like, okay, this is an Intel story, Like is 59 00:03:07,160 --> 00:03:09,280 Speaker 1: Intel getting a lifeline? Like you know, we've talked with 60 00:03:09,360 --> 00:03:12,720 Speaker 1: the inking who's done great dives as you know, into 61 00:03:12,880 --> 00:03:15,840 Speaker 1: how Intel got to where it is today. Having said that, 62 00:03:15,880 --> 00:03:18,640 Speaker 1: I thought, how much of this is a quad Comm story? 63 00:03:18,720 --> 00:03:22,480 Speaker 1: Qualcom looking to transform itself in a different way right. 64 00:03:23,200 --> 00:03:25,960 Speaker 4: I'm just dotting the eyes and crossing the t's. But 65 00:03:25,960 --> 00:03:29,040 Speaker 4: I got the emails in my inbox. Intel declines to comment, 66 00:03:29,080 --> 00:03:32,480 Speaker 4: so I just just doing that, you know, because it's 67 00:03:32,520 --> 00:03:34,640 Speaker 4: a you know again, the Wall Street Journal story is 68 00:03:34,639 --> 00:03:39,920 Speaker 4: one citing anonymous sources, and neither company is commenting. It's 69 00:03:40,000 --> 00:03:43,240 Speaker 4: really difficult to answer. Should we do some math together 70 00:03:43,480 --> 00:03:46,560 Speaker 4: on how feasible such a deal would be. Qualcom has 71 00:03:46,600 --> 00:03:48,640 Speaker 4: a market cap of about one hundred and eighty five 72 00:03:48,680 --> 00:03:51,880 Speaker 4: billion dollars. Intel has a market cap of around ninety 73 00:03:51,920 --> 00:03:55,520 Speaker 4: billion dollars. Qualcom has thirteen billion dollars on It's a 74 00:03:55,560 --> 00:03:59,880 Speaker 4: balance sheet of cash and crash equivalents, and then there's antitrust. 75 00:04:01,000 --> 00:04:03,160 Speaker 4: I'm not I just said on TV to Addict Steele 76 00:04:03,320 --> 00:04:06,160 Speaker 4: and Vonnie Quinn. I'm not a banker, guys. I'm a journalist, 77 00:04:06,480 --> 00:04:09,160 Speaker 4: but I do have some experience in reporting on deals, 78 00:04:09,160 --> 00:04:12,440 Speaker 4: and I don't know how one would finance such a venture. 79 00:04:12,920 --> 00:04:17,240 Speaker 3: Don't undersell yourself, thank you, you know. To me, it 80 00:04:17,360 --> 00:04:21,760 Speaker 3: seems like if you're going to strike, now is a 81 00:04:21,800 --> 00:04:25,520 Speaker 3: pretty good time because Intel is on its knees. I mean, 82 00:04:25,560 --> 00:04:28,479 Speaker 3: they have plans to build factories and people aren't really 83 00:04:28,480 --> 00:04:30,000 Speaker 3: sure if they're going to be able to go through 84 00:04:30,000 --> 00:04:32,599 Speaker 3: with it. I know the federal government is aching to 85 00:04:32,680 --> 00:04:36,040 Speaker 3: give them billions and billions of dollars, but they're having 86 00:04:36,080 --> 00:04:40,400 Speaker 3: to figure out ways to do that, you know, finding 87 00:04:40,440 --> 00:04:44,720 Speaker 3: them clients essentially. So I mean, if you're going to 88 00:04:44,760 --> 00:04:48,400 Speaker 3: buy Intel at all, I mean, it's better surely to 89 00:04:48,440 --> 00:04:50,760 Speaker 3: do it after their stock has fallen sixty percent year 90 00:04:50,800 --> 00:04:51,120 Speaker 3: to date. 91 00:04:51,800 --> 00:04:54,560 Speaker 4: Yeah, there is an element of timing, you know, and 92 00:04:55,040 --> 00:04:57,000 Speaker 4: you can talk about you state performance or even the 93 00:04:57,240 --> 00:05:01,400 Speaker 4: performance of the last two years for both companies. Relatively speaking, 94 00:05:01,920 --> 00:05:04,280 Speaker 4: it's just for me, like the technology story doesn't make 95 00:05:04,320 --> 00:05:08,799 Speaker 4: a lot of sense, you know. We interviewed Christiano Ammon, 96 00:05:08,880 --> 00:05:11,719 Speaker 4: the Quowdcom CEO, many times in the last two years, 97 00:05:12,040 --> 00:05:15,080 Speaker 4: and on earnings in particular, it took a long time 98 00:05:15,120 --> 00:05:18,200 Speaker 4: for investors to give him credit for his vision of 99 00:05:18,279 --> 00:05:22,200 Speaker 4: moving Qualcom beyond a company that did one thing, which 100 00:05:22,240 --> 00:05:25,880 Speaker 4: is the RF chip in your phone and the modem 101 00:05:25,920 --> 00:05:28,800 Speaker 4: in your phone, particularly on behalf of the likes of Apple, right. 102 00:05:29,040 --> 00:05:32,159 Speaker 4: He wanted Qualcom to design semiconductors that did all kinds 103 00:05:32,160 --> 00:05:34,840 Speaker 4: of things in cars and now PCs. He wanted to 104 00:05:34,880 --> 00:05:38,160 Speaker 4: be at the cutting edge of virtual augmented reality headsets, 105 00:05:38,360 --> 00:05:39,680 Speaker 4: and it took a lot of time to show up 106 00:05:39,680 --> 00:05:42,159 Speaker 4: in the financials, but it is now showing up in 107 00:05:42,200 --> 00:05:46,320 Speaker 4: the financials, and so you know, forget the foundry business 108 00:05:46,360 --> 00:05:48,960 Speaker 4: for a second. Intel has all these products across PC 109 00:05:49,080 --> 00:05:53,400 Speaker 4: and data center that Qualcom is now being competitive in 110 00:05:53,440 --> 00:05:56,440 Speaker 4: but in its own right. So why you know, from 111 00:05:56,480 --> 00:05:58,800 Speaker 4: a technology perspective, it doesn't make a lot of sense either. 112 00:05:59,120 --> 00:06:00,920 Speaker 2: Look at that the journals. I know you've been looking 113 00:06:01,000 --> 00:06:03,080 Speaker 2: at it as well. A deal far from certain. The 114 00:06:03,080 --> 00:06:06,440 Speaker 2: people cautioned to get the deal done. Qualcom could intend 115 00:06:06,440 --> 00:06:09,320 Speaker 2: to sell assets or parts of Intel to other buyers. 116 00:06:09,360 --> 00:06:14,400 Speaker 2: So just a few more aspects of this. Yeah, it's 117 00:06:14,480 --> 00:06:16,680 Speaker 2: just kind of interesting to get our head around it. Right, 118 00:06:16,680 --> 00:06:20,200 Speaker 2: there's just so little information you do wonder, But yeah, 119 00:06:20,320 --> 00:06:22,960 Speaker 2: Intel is in a weaker spot, and I guess we 120 00:06:23,040 --> 00:06:25,560 Speaker 2: keep trying to think about what is the Intel of 121 00:06:25,600 --> 00:06:29,000 Speaker 2: the future. The government, you know, and conversations we've had 122 00:06:29,000 --> 00:06:31,400 Speaker 2: with you and with you and King about the importance 123 00:06:31,440 --> 00:06:35,919 Speaker 2: of having Intel as a chip company in the United 124 00:06:35,960 --> 00:06:40,159 Speaker 2: States is important for national security concerns, right, It's important 125 00:06:40,200 --> 00:06:43,480 Speaker 2: for the United States. So you do wonder about something 126 00:06:43,839 --> 00:06:47,279 Speaker 2: seems to have to happen to Intel going forward. 127 00:06:47,360 --> 00:06:49,840 Speaker 4: Yeah, I also didn't really answer Matt's question, for which 128 00:06:49,880 --> 00:06:52,760 Speaker 4: I apologize and both of your questions basically, well, isn't 129 00:06:52,800 --> 00:06:56,080 Speaker 4: Intel in a perilous situation? And again go to the 130 00:06:56,080 --> 00:06:58,480 Speaker 4: two parts of its business. It used to be a 131 00:06:58,480 --> 00:07:00,920 Speaker 4: clear leader in many markets, which it's now a lot 132 00:07:01,279 --> 00:07:03,760 Speaker 4: not You know, you guys know the story so well. 133 00:07:04,000 --> 00:07:07,800 Speaker 4: In data centers, everybody wants in Vidia's GPU to train 134 00:07:07,880 --> 00:07:11,320 Speaker 4: AI models. Intel didn't have one for quite a long time, 135 00:07:11,560 --> 00:07:14,640 Speaker 4: but it also was over index towards CPUs a bit 136 00:07:14,680 --> 00:07:17,680 Speaker 4: a more basic processor, and then demand fell away. On 137 00:07:17,760 --> 00:07:20,280 Speaker 4: the foundry side, they wanted to be the factory for 138 00:07:20,360 --> 00:07:23,080 Speaker 4: chip makers or chip designers all over the world, but 139 00:07:23,160 --> 00:07:25,840 Speaker 4: they weren't really and that was why it was significant 140 00:07:25,840 --> 00:07:27,920 Speaker 4: that they were able to name a WS as a 141 00:07:27,920 --> 00:07:31,080 Speaker 4: customer to show that they could service a third party. 142 00:07:31,600 --> 00:07:34,280 Speaker 4: But at the same time, running a business is about 143 00:07:34,560 --> 00:07:37,760 Speaker 4: how much revenue're generating, how much you're spending to generate 144 00:07:37,800 --> 00:07:41,040 Speaker 4: that revenue, and whatever your profit and losses are, and 145 00:07:41,200 --> 00:07:43,280 Speaker 4: they had to do something desperate to react to that, 146 00:07:43,400 --> 00:07:46,240 Speaker 4: which is all of the projects initiated in the last 147 00:07:46,440 --> 00:07:49,080 Speaker 4: couple of years were reviewed and they cut back, they 148 00:07:49,080 --> 00:07:52,160 Speaker 4: cut headcount, and so they seemed to be on a 149 00:07:52,200 --> 00:07:54,960 Speaker 4: path forward, which again the timing of this, the Wall 150 00:07:54,960 --> 00:07:58,840 Speaker 4: Street Journal's report is that Quowcom approached Intel, not necessarily 151 00:07:58,920 --> 00:08:01,200 Speaker 4: that Intel was shopping at self or anything like that. 152 00:08:01,440 --> 00:08:04,040 Speaker 2: Right, that's a big difference, isn't that a bit a 153 00:08:04,040 --> 00:08:04,560 Speaker 2: big difference? 154 00:08:04,680 --> 00:08:05,840 Speaker 1: Huge? Yeah? 155 00:08:05,920 --> 00:08:10,320 Speaker 4: Yeah? And also you know, frankly, what this may get 156 00:08:10,360 --> 00:08:13,240 Speaker 4: me in hot water? I don't know, but Pat Gelsinger's 157 00:08:13,280 --> 00:08:15,200 Speaker 4: job was on the line, and as of the latest 158 00:08:15,200 --> 00:08:18,800 Speaker 4: board meeting and strategy review, he survived, right, So I 159 00:08:19,120 --> 00:08:22,040 Speaker 4: don't necessarily think that makes sense either from his perspective 160 00:08:22,360 --> 00:08:23,800 Speaker 4: and trying to turn around the company. 161 00:08:24,840 --> 00:08:27,120 Speaker 3: I just wonder about the two businesses and if you 162 00:08:27,200 --> 00:08:29,840 Speaker 3: had to assign out of the ninety billion dollars in 163 00:08:29,920 --> 00:08:32,400 Speaker 3: market cap, if you had to assign some of that 164 00:08:32,440 --> 00:08:35,520 Speaker 3: to the design business and the rest to the foundry business, 165 00:08:35,840 --> 00:08:36,720 Speaker 3: how's that breakdown? 166 00:08:36,760 --> 00:08:37,000 Speaker 1: Look? 167 00:08:37,160 --> 00:08:39,319 Speaker 2: Just quickly, kid, iou rot about thirty seconds. 168 00:08:39,800 --> 00:08:41,440 Speaker 4: I'm trying to bring up fa go and give you 169 00:08:41,480 --> 00:08:43,520 Speaker 4: the actual answer, and I can't. I'm not quick enough. 170 00:08:43,559 --> 00:08:46,400 Speaker 4: But I think basically that at this point it's a 171 00:08:46,440 --> 00:08:49,640 Speaker 4: pretty even split, but the future is predicated on foundry. 172 00:08:50,880 --> 00:08:54,600 Speaker 2: Pretty wild, all right. You might have a busy weekend 173 00:08:55,200 --> 00:08:59,520 Speaker 2: I imagine, sorry, and he. 174 00:08:59,600 --> 00:09:02,040 Speaker 3: Looks so bombed down and had something plain tonight. 175 00:09:03,000 --> 00:09:05,560 Speaker 4: You can tell it's like, honey, my wife watches this show, 176 00:09:05,600 --> 00:09:06,360 Speaker 4: listen to this show. 177 00:09:06,440 --> 00:09:08,040 Speaker 2: So yeah, all right. 178 00:09:08,200 --> 00:09:10,480 Speaker 1: Ed Ludlow, of course, co host of Bloomberg Technology on 179 00:09:10,480 --> 00:09:11,560 Speaker 1: Bloomberg Television.