Intel should buy Qualcomm

qualcomWall Street analysts are suggesting that Chipzilla should buy Qualcomm if if the maker of Snapdragon mobile processors decides to break itself up.

Cowen and Co analyst Timothy Arcuri, told Reuters  the move would give Intel’s smartphone chip making business a much-needed boost.

It would also allow Intel to expand its footprint in the key Chinese market, he said.

Qualcomm’s chip business which is valued at $30 billion-$40 billion, could include a consortium backed by the Chinese government and Samsung Electronics.

Qualcomm said it was thinking over a possible separation of its two businesses, a move prompted by activist shareholder Jana Partners.

The maker of computing and communication chips for mobile gear has been losing ground to Asian rivals such as MediaTek whose cheaper versions have given them an edge in the price-conscious Asian market.

Samsung’s decision to use its own chips in its flagship Galaxy S6 smartphone instead of Qualcomm’s Snapdragon also did not help.

A deal with Intel, which has its own foundries, will help Qualcomm cut costs and price its chips more competitively.

Ascendiant Capital Markets analyst Cody Acree said that this would catapult Intel into the leadership position and give it diversity away from PCs that it very much needs.

Cowen’s Timothy Arcuri said the business could be worth about $20 per share — less than a third of Qualcomm’s current share price — and Intel could offer $25 per share.

Of course this is the stuff which analysts say when they have a few too many shandies and not enough pork pie. Arcuri and his chums don’t think that a split makes sense, so any Intel deal is unlikely anyway.