Intel share price fall sparks questions over $2.2 billion Classiq deal

Intel, the giant chipmaker, is facing serious questions about its $2.2 billion acquisition of Israeli quantum software firm Classiq after a brutal plunge in its share price. Just last Monday, Intel announced it was taking control of Classiq, which holds the largest market share in quantum computing software.

But investors quickly brushed past the deal and punished Intel for its third-party results three days later. The rise in personal computer prices hurt traditional laptop chip sales, while an explosion at a factory in Kiryat Gat cut next quarter's sales forecast.

Then a broader tech sector sell-off hit semiconductor giants amid fears of an artificial intelligence bubble and expensive server farm construction costs. Intel's share price has fallen by 42% since the close of trading the day after the Classiq purchase was announced, wiping 55% off its value in the past month.

RelatedIntel just bought Israeli quantum computing firm Classiq for $2.2 billion

The chip company once valued at half a trillion dollars now carries a market cap of $277 billion, even as core processor sales for cloud servers and AI jumped 78%. According to Globes, the dramatic drop raised fears that Classiq's $2.2 billion price tag might crash because the deal was initially set in shares.

Intel later clarified in its reports that the transaction is split into $1.9 billion subject to adjustments and $350 million tied to future milestones, with closing expected in the first half of next year. While the companies agreed on payment in Intel shares, no shares have been allocated yet, and the final mix of cash and stock remains flexible.

Intel sits on $54 billion in cash and a $15 billion credit line, but it needs those funds to build massive chip factories in Ohio, Arizona, Oregon, Malaysia and New Mexico while paying down $50 billion in debt.