Once a semiconductor powerhouse, Intel is falling from grace and now has two firms vying to catch it. San Diego-based Qualcomm is offering to acquire the company, the Wall Street Journal first reported, while asset management firm Apollo Global Management has offered an investment lifeline worth up to $5 billion, Bloomberg reports.

Intel has a market capitalization of around $96 billion as of Monday, Sept. 23. The company has been in the semiconductor game since the ’60s and despite the growing demand in the industry, Intel is falling behind its competitors. 

Since the start of the year, Intel’s stock has plunged 53%. At the same time, NVIDIA is up 140%. 

That performance may make it seem like Intel is currently at a discount, but analysts say a Qualcomm takeover would face significant regulatory issues, particularly in China.

What exactly is going on at Intel and how does it affect the billions of dollars the government promised the company through the CHIPS Act? 

In August, Intel announced a $1.6 billion quarterly loss and plans to cut 15,000 workers. Five months prior, the Biden administration and Intel had announced $8.5 billion in direct funding from the CHIPS Act to support the company’s several semiconductor projects, saying the projects would create 10,000 company jobs, 20,000 construction jobs and 50,000 indirect jobs. 

And a week ago, the company confirmed another $3 billion in CHIPS Act funding for military chips. 

“Giving money to Intel is pretty much, in my opinion, throwing it down a hole,” said Edward Snyder, managing director of Charter Equity Research.

Straight Arrow News spoke with Snyder over the phone about how Intel fell so far behind rivals TSMC and Samsung.

“All companies that are rich and successful for a very long period of time run the risk of becoming ossified and arrogant, and that certainly happened with Intel,” he said. “And it wasn’t a problem when the industry was doing what it’s always been doing. But then when you get a change in the industry, it requires you to be nimble and aggressive and competitive. Those companies really run into problems.”

It’s a sentiment the company is certainly familiar with. Intel CEO Pat Gelsinger said as much after those disappointing quarterly earnings in August. 

“We see quite a number of areas where I’ll just say we’re not a nimble, efficient company,” he said in an interview. “And as we look at it through this clean sheet lens, we’ve looked at every area, our GNA, our sales and marketing, our operational performance, as we look at our design teams, we haven’t been fully leveraging industry best practices and EDA and design practices.”

Gelsinger called the layoffs the most substantial restructuring of Intel in decades. He’s been CEO since 2021. He was chief technology officer during Intel’s heyday in the aughts and left the company in 2009. 

“They’re scrambling and desperately trying to change,” Snyder said. “But the culture isn’t built for change. It’s built for, ‘Just keep doing what we’re doing,’ just crush everybody with their market share, so they’re incapable of reacting, [in] my opinion.”

When Gelsinger first took the reins, he told “60 Minutes’” Lesley Stahl they were coming for Taiwan-based TSMC’s market share.

“They’re ahead of you on the manufacturing side,” Stahl said. “Considerably ahead of you.”

“We believe it’s gonna take us a couple of years and we will be caught up,” Gelsinger replied.

A couple of years on, there’s still a marathon to go. TSMC has about 62% of the global foundry market share while Intel’s not on the map. 

“Even if they could build it, how long is that going to take?” Snyder said. “And even if you could build it and it took three or four years, ‘Why would I change? I’m at TSMC, right? Everything’s going very well. Why would I go to Intel and risk my product?’”