Finimize - 🤝 Intel, meet Qualcomm

What’s going on here?

Qualcomm knocked on rival Intel’s door to propose a friendly takeover – one that’d be the biggest in the history of tech.

What does this mean?

Intel was once a heavy hitter, but the tech firm is now struggling through its roughest period in five decades. Not only did it fail to ride the AI boom by not building souped-up smart chips, but its main chip business has been lagging behind the competition, too. So its valuation – which once peaked at $500 billion – now hovers closer to $90 billion. But Qualcomm sees the potential. The chip designer has approached the old-timer with a takeover bid, one that would be even heftier than Microsoft’s record-setting $69 billion deal to scoop up Activision. Problem is, even if Intel bites, the deal could attract scrutiny from regulators tasked with moderating monopolies – attention that’s burned many tech giants recently.

Why should I care?

For markets: Home-grown chips.

Qualcomm designs chips but doesn’t manufacture them itself like Intel, and chipmaking is a costly business. Qualcomm’s “capital expenses” – spending on fixed assets like buildings and equipment – was $1.5 billion last year. That’s just over 4% of its sales, while Intel’s spending on the same thing totaled $26 billion: nearly half of its revenue. So you could imagine that Qualcomm might want to ditch Intel’s chip making arm entirely if the deal goes through. But Qualcomm – and other chip designers – have a vested interest in keeping Intel’s cogs churning. Otherwise, they’ll end up even more reliant on Taiwanese TSMC when they want to turn chip designs into reality.

The bigger picture: No one puts Intel in the corner.

Plot twist: Qualcomm’s not the only one interested in Intel. Private equity firm Apollo Global Management has reportedly stepped up with as much as $5 billion to pour into the firm. That could keep Intel operating under its own steam for longer rather than acquiescing to a takeover.

What’s going on here?

Growth in the eurozone’s private sector came in shockingly low, as the last days of summer faded into a fall – literally.

What does this mean?

The Paris Olympics might’ve gotten the European economy moving this summer, but those cheers are now a distant memory and there’s nothing to distract from the region’s shortcomings. Germany’s manufacturing industry – usually the backbone of the European economy – is suffering from poor demand and fierce competition. That’s partly why the European private sector (think services and manufacturing) shrank in September for the first time since March. In fact, September’s measure fell to a shocking 48.9 – far worse than economists’ predictions of a small drop to 50.5, and enough to indicate that the economy’s shrinking.

Why should I care?

The bigger picture: Actions not just words.

Europe’s top challenges – from lackluster tech innovation to geopolitical vulnerabilities – aren’t just short-term hurdles: they’re existential threats that need addressing right away. That’s why the former president of the European Central Bank chimed in recently with a potential plan. The idea is for Europe to focus on three clear goals: boost innovation by making it easier for tech companies to grow, lower energy costs while staying competitive in clean energy, and reduce reliance on foreign resources by building up its own industries and defense. And with the latest data suggesting that the region is only falling further behind, Europe might be wise to listen.

For markets: Drama Queen.

As if Europe needed any more drama, Italian bank UniCredit has just arranged to more than double its stake in Commerzbank. It’s working toward a full-blown takeover of the German bank, eager to diversify away from Italian markets. The German government is less than thrilled, though. With its 12% stake now dwarfed by UniCredit’s 21%, it’s – understandably – reluctant to let a foreign bank influence one of Germany’s biggest financial institutions.