Intel shareholders are finally getting used to good news again. The financial giant Apollo Global Management appears ready offering a stock-like investment of up to $5 billion in the troubled U.S. chipmaker, according to a report from Bloomberg on Sunday. The move would be a major vote of confidence in the recovery effort led by Intel CEO Pat Gelsinger, which has so far only led to deteriorating results and a plunging share price.
Intel has lost more than $100 billion in market capitalization this year and its shares have fallen more than 50% as one of Silicon Valley’s original powerhouses struggles to rebuild. The stock jumped 5% Monday in premarket trading following the Apollo news and yet remains up about 1.5% from Friday’s close, building on last week’s gains.
News from a agreement with Amazon Web services aimed at producing an advanced AI chip and the company’s plans to spin off its struggling foundry business helped shareholders get some much-needed relief as shares rose 14.5% over the past two previous weeks.
Apollo’s offer comes soon after news That rival chipmaker Qualcomm has contacted Intel to explore a friendly acquisition. A deal would be one of the largest in M&A history, but it would almost inevitably face regulatory hurdles.
It would also highlight how far Intel has fallen from the top of the semiconductor mountain. Once the world’s largest chipmaker, Intel’s market capitalization of $93 billion is now about half that of Qualcomm. Intel shares rose 3.4% on Friday following reports of Qualcomm’s approach, while shares of the San Diego-based company fell 2.9% as investors considered the risks of such an operation.
Intel, meanwhile, continues to struggle with cost and competitive pressures. The market for traditional PC chips, or CPUs, has traditionally been Intel’s core business. However, it failed under competition from Advanced micro-devicesOr AMDwhose cheaper and more efficient ARM processors caused Intel to lose market share.
At first glance, the company also seemed poised to take advantage of the AI boom. In reality, the company hasn’t produced anything that can compete with Nvidia’s GPUs or graphics processing units, which are anything but essential for companies training GenAI models. Intel’s foundry business, which is becoming an independent subsidiary, lags far behind that of TSMC.
Amid yet another disappointing earnings release and gloomy guidance, the company announcement in August, it would reduce its workforce by 15%, a loss of about 15,000 employees, as part of a $10 billion cost-cutting effort.