Intel Corp (INTC)

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Qualcomm Break-up? Good Idea, Says Berenberg; Intel Might Buy

By Tiernan Ray

Following speculation a report this morning by The Wall Street Journal that activist shop Jana Partners is urging chip maker Qualcomm (QCOM) to break itself in two, one of the first Street responses comes from Berenberg’s Adnaan Ahmed, who thinks it’s a good idea.

Ahmed, referring to his own open letter to Qualcomm two years ago, argues Qualcomm’s chipset business, QCT, has had volatile margins, and that its royalty business, QTL, has seen its royalty rate decline.

In a break-up, he writes, Intel (INTC) could buy QCT to boost its place in mobile chips, and QTL could buy ARM Holdings (ARMH) to boost its patent position.

Writes Ahmed,

As you are aware, there is news this AM that a large investor is agitating for a spin out of this biz. With the Intel-Altera deal potentially off the table for now, Intel for QCT could be an option (I would buy ARM on the back of that). More importantly, if this spin out does materialise, QTL, needs to diversify its revenue base and once again ARM could be a target here.