- President Trump on Monday blocked chipmaker Broadcom (NASDAQ:AVGO)'s proposed $117 billion buyout of Qualcomm (NASDAQ:QCOM), citing national security.
- Shares of Intel (NASDAQ:INTC) rose after the executive order as a potential large new competitor is essentially wiped out.
- "This decision hangs a huge ‘not-for-sale’ sign on just about every American semiconductor firm," one analyst said.
Shares of Intel rose more than 4%, hitting a record high of $53.76, Tuesday morning after President Donald Trump blocked competing Broadcom’s proposed $117 billion buyout of Qualcomm. The deal would have created a major competitor for the chipmaker.
Intel, which historically has not been a major player in mobile chips, has been trying to grow its presence in the segment and even considered entering a competing bid for Qualcomm to stave off the threat of increased competition.
Together, the competing chipmakers had 2016 revenue of $14.77 billion from mobile chips, compared to Intel's $327 million in the same segment.
Intel's total adjusted revenue, most of which is from processing hardware not for mobile, was $62 billion in 2017. A combined Qualcomm-Broadcom company could theoretically create the third-largest chip company by revenue.
Apple (NASDAQ:AAPL) has recently entertained the idea of replacing its Qualcomm chips in iPhones for Intel hardware, a KGI Securities analyst said in February. Qualcomm’s stock nosedived on the report.
For now, Intel is likely safe from any new international competition, at least until Wall Street fully processes all the ramifications from Trump’s citing of national security to block the merger.
"This decision hangs a huge ‘not-for-sale’ sign on just about every American semiconductor firm," Scott Kennedy, deputy director and chair of China studies at the Center for Strategic & International Studies in Washington, told Bloomberg News. "A Chinese entity doesn’t need to be anywhere near a transaction now in semiconductors for the deal to be nixed."
Trump has now blocked a total of nine takeover attempts by foreign companies, mostly from China, according to data compiled by Bloomberg.
Shares of Intel are up 9.8% so far in 2018.