Facing a break-up or acquisition, a private investment firm that previously bailed out Western Digital may offer struggling microprocessor maker Intel another way forward.
According to a report in Bloomberg, privacy equity firm Apollo Global Management has offered to invest as much as $5 billion in Intel so that it can follow through on CEO Pat Gelsinger's turnaround plan for the beleaguered chipmaker.
The publication cites multiple sources and notes that it would be an "equity-like" investment, meaning that Apollo would own some portion of Intel. Intel is apparently reviewing the deal, which would likely be attractive to the company's leadership than a Qualcomm acquisition. And a lot more attractive than the most likely outcome if Intel is left to its own devices, a break-up of the company, managed by the U.S. government, into chip design and manufacturing businesses.
That said, Qualcomm's offer is friendly, not hostile, and would require the two companies to come to some agreement. It's not clear whether a Qualcomm acquisition or continuing forward with an Apollo equity investment would be better for Intel shareholder. But the firm has already lost more than half its value this year and is spiraling badly: In January, Intel was worth more than Qualcomm, but now the tables have turned, and Qualcomm is worth more than double the value of Intel.
Gelsinger's plan to return Intel to its historic roots as a designer and maker of its own chips, and expand into manufacturing chips for others, is a good one. But it's also expensive: Intel plans to invest over $100 billion in this scheme, which includes refurbishing existing plants and building new facilities, over several years. And it flies in the face of how the rest of the industry now works. Most of the rest of the world's best-known chip designers-including Apple, AMD, and Nvidia-manufacturer their own chips.