What does Nvidia, Intel deal mean for the industry?

The CEOs of Nvidia and Intel provided deeper insights on the former’s $5 billion investment in the latter during a conference call, including answering numerous questions about Nvidia using Intel’s foundry technology.

Intel CEO Lip-Bu Tan (pictured, left) and Nvidia CEO Jensen Huang (pictured, right) stressed on the call yesterday (18 August) the partnership is firmly focused on the products the two companies will jointly develop.

Analyst Jack Gold noted both companies use TSMC’s fabrication facilities and Intel will need to prove out its 14A process before Nvidia considers using it.

“I think we would both say that TSMC is a world-class foundry,” Huang said. “I just can’t overstate the magic that is TSMC.”

Products

Intel gained access to Nvidia’s NVLink technology to build future superchips together. Nvidia’s proprietary NVLink interconnect is used to connect CPUs and GPUs for the chips.

The companies will also partner on building a new consumer-grade PC chip that fuses GPUs and CPUs.

Huang noted Nvidia gains wide access to a PC market which sells 150 million notebooks a year while pegging the data centre revenue opportunity at $25 billion to $50 billion.

Gold stated in a research note Intel controls 75 per cent to 85 per cent of the AI PC market and said Nvidia has a better chance of being a player in that space through Intel.

Huang and Tan didn’t say when the joint products will be available.

AMD

AMD competes against Intel for supplying chips to data centres and PCs. Gold noted the partnership could have an impact on AMD “although they are doing well with their own AI efforts in GPU and CPU”.

“Still, having two major competitors combining their efforts is not exactly a positive outcome for AMD,” he explained. “And with a slew of startup contenders for AI market share, the collaboration of these two behemoths should be seen as a bigger hurdle to jump through for any real market share.”

A representative for AMD told Mobile World Live (MWL) the company “continues to consistently execute our x86 leadership roadmap, delivering high-performance products that power everything from PCs to data centres”.

“We are confident in our ability to continue driving innovation and market share growth and reinforcing AI as the company’s top strategic priority.”

Trump factor

While Huang accompanied President Donald Trump on his trip to the UK, he said the president had “no involvement in the partnership at all,” but his administration “would have been very supportive”.

The Nvidia CEO said he told US Secretary of Commerce about the partnership while both were in London,” and he was very excited, very supportive of seeing American technology companies working together”.

Huang said Nvidia and Intel started working on the partnership over year ago, which pre-dates Tan taking over as CEO in March. The Intel CEO said he started collaborating with Huang on his first day as CEO.

Top turnaround

After slashing the company’s headcount and hearing Trump call for his resignation, Tan has mounted a dramatic comeback which also includes a 10 per cent equity stake in the company by the US government and a $2 billion capital injection from SoftBank Group.

“This is a game changer deal for Intel as it now brings them front and centre into the AI game,” analyst Dan Ives of Wedbush Securities told MWL. “This has been a golden few weeks for Intel after years of pain and frustration for investors.

“Today’s announcement further strengthens the US lead in the AI Arms Race against China as Intel now goes from a laggard to a catalyst.”

Summing up the news, Gold said the partnership “should be seen as advantageous to both companies, “and not just seen, as some might say, as a bail-out for Intel”.