Qualcomm acquires Intel? Morgan Stanley: A new overlord emerges, negative for Taiwan Semiconductor, disastrous for Samsung Electronics

Last week, according to The Wall Street Journal, Qualcomm has been in talks with Intel regarding the acquisition of Intel, which could potentially become one of the largest mergers in the history of the technology industry.

Analysts at Morgan Stanley believe that if the deal goes through, Qualcomm will become a dominant player in the fields of client computing, automotive computing chips, and data center CPUs. However, this acquisition could also impact the Asian tech supply chain. If Qualcomm were to allocate wafer fabrication orders to Intel in the future, it would pose significant risks to wafer fabrication plants represented by Samsung.

Qualcomm to Claim Dominance

Analysts Gokul Hariharan AC, Robert Hsu, and Lakshya Jain from Morgan Stanley stated in a report on September 23 that currently, Qualcomm leads the market in mobile computing, while Intel dominates the PC and server CPU markets.

A merger between the two companies would create a giant with the highest market share in the PC CPU, smartphone system chip, and data center CPU markets, and with the majority stake in Mobileye, they would hold a strong position in the advanced driver-assistance systems (ADAS) and autonomous driving technology sectors.

Furthermore, Qualcomm is already a leader in automotive infotainment, connectivity, and smart cockpit solutions, with over $45 billion in order backlog.

Morgan Stanley mentioned that such a merger would give Qualcomm greater bargaining power in the Asian semiconductor supply chain, which the market may see as a "threat" to the Asian tech industry. Especially against the backdrop of Qualcomm's ARM architecture failing to make waves in the PC market, this acquisition would help Qualcomm establish a leading position in the PC CPU market.

Uncertain Future for Intel's Foundries, Pressure on TSMC

Analysts also pointed out that if Qualcomm acquires Intel, the impact on its foundries remains unclear.

Qualcomm has always been a fabless company, and operating a leading foundry would require significant capital expenditure. If Qualcomm were to spin off Intel's foundries into an independent entity while ensuring a large number of orders, this would be disadvantageous to TSMC.

It is worth noting that Intel lacks experience in low-power processes and currently relies on TSMC's N3 process to produce the upcoming Lunarlake mobile processor. Qualcomm has previously used both TSMC and Samsung, but due to issues with Samsung's foundry process improvements, they have decisively shifted to TSMC in recent generations.

The report indicates that Qualcomm may not be able to transfer wafer fabrication orders in the short term, especially since the success of process improvements is crucial for maintaining competitiveness in the PC and smartphone sectors, especially in fierce competition with rivals such as Apple, AMD, and MediaTek.

"Disastrous" Blow to Samsung

Analysis suggests that for Samsung, the potential risks posed by Qualcomm's acquisition of Intel may be more severe. Morgan Stanley stated:

"Qualcomm has always been a major customer for Samsung's new process technology. In the future, if Qualcomm allocates wafer foundry orders to Intel foundries and Taiwan Semiconductor, this will pose significant risks to Samsung's leading wafer foundry target market."

As for companies like MediaTek and Asian waferless companies, Morgan Stanley pointed out that as competitors become larger, Qualcomm may also weaken some smaller businesses such as connectivity and radio frequency, creating new opportunities for them