Nvidia-Intel Partnership: A Potential Shake-Up in the Chip Industry While TSMC Holds its Ground

TradingKey - Semiconductor giant Nvidia has made a splash by investing $5 billion to acquire a stake in its former rival Intel, becoming one of its largest shareholders, and announcing a major collaboration on chip development.

This news sent Intel's stock soaring over 22%, while shares of fellow semiconductor companies AMD and TSMC opened lower but recovered later. Analysts are weighing in on whether the Nvidia-Intel alliance could impact allies or competitors.

Nvidia declared that it will collaborate with Intel to develop chips aimed at PCs and data centers. Intel will incorporate Nvidia's graphics processing technology into its next-generation PC chips. In the data center arena, Intel will customize x86 CPUs for Nvidia, which Nvidia will integrate into its AI infrastructure platform for market release.

Moreover, Nvidia plans to employ its high-speed interconnect technology, NVLink, to achieve seamless connectivity between their architectures, enhancing chip communication speeds.

A Reuters report noted that TSMC currently produces Nvidia's flagship processors, but future orders might be partially allocated to Intel, which also offers chip foundry services, in light of the newly formed collaboration between Nvidia and Intel. Investment firm Aptus Capital Advisors voiced that, in the long run, this could pose significant operational risks for TSMC.

However, some analysts believe the impact on TSMC will be minimal. Analysts from global research firm Moor Insights & Strategy highlighted an important aspect: the collaboration does not involve Intel's chip foundry business.

In recent years, Intel's chip foundry arm has been operating at a loss and lagging far behind competitor TSMC in manufacturing processes. The partnership has not announced the use of Intel's 18A or 14A process nodes for foundry technology, possibly because Nvidia has not fully endorsed Intel's technology.

Analyst Ming-Chi Kuo from TF International Securities pointed out that TSMC’s leadership in high-performance computing (HPC) foundry processes will likely maintain its edge until at least 2030. Orders for AI chips, which highly rely on advanced processes, are unlikely to be affected by this collaboration.

Nevertheless, Ming-Chi Kuo mentioned another potential impact on TSMC: the partnership might eventually affect competitors like AMD’s market share, subsequently influencing TSMC’s orders.

Bloomberg's analysis suggests that the long-term impact of this partnership on TSMC will depend heavily on the future development of Intel’s chip foundry capabilities.