Qualcomm Inc. (NASDAQ QCOM) has reportedly expressed interest in acquiring Intel Corp. (NASDAQ INTC), in order to possibly strengthen their position in the server and PC markets.
Nvidia Corp. (NASDAQ: NVDA), the AI-favorite, could make a good suitor to replace the chipmaker who has lost over 60% of its market share in 2024. Why? It has more resources and capital to transform INTC optimally.
It’s not just about numbers. Nvidia also has a strategic reason to take over Intel. Here’s why.
Why should Nvidia take over Intel?
Intel provides CPUs for personal computers and data centers.
Nvidia is therefore in a good position to benefit from an INTC acquisition and grow its existing business, as the company already has a strong presence on both markets.
Intel has also committed to expanding its market share in graphics processing units by introducing its Gaudi 3 chip, a more advanced version of the Gaudi 2.
NVDA will also be less competitive if the giant semiconductor company is taken over.
The overlap between Intel’s and Nvidia’s markets, as well as the potential for less competition, means that the AI behemoth would likely encounter significant regulatory obstacles if it proposed an INTC acquisition.
Intel may have assets that are worth more than Nvidia but they will not just fall into its lap.
Intel’s Foundry Business may appeal to NVDA
Nvidia, although a designer of chips, is not a silicon foundry. It outsources this production to companies like TSMC.
A buyout by Intel would help to shield NVDA against geopolitical tensions, such as an escalation in trade tensions between China and the United States.
This is especially significant, given that Intel has made great strides with chip manufacturing.
The company anticipates that it will begin to mass produce chips with a sub-2 nanometre size by 2024 – about a full year earlier than TSMC.
Intel’s 18A technology, which is the most advanced manufacturing technique available today, may have a significant benefit for Nvidia since it concentrates on GPUs that are designed for AI-related tasks.
Nvidia is willing to pay more for Intel
Nvidia could pay as much as 50% more if it were to pursue Intel.
NVDA has a current cash balance of $35 billion and is a company worth $3 trillion.
Qualcomm, on the other hand, has a market capitalization of less than $200 billion and a cash status that is no more than $10 billion.
Although it is financially feasible and strategic for Nvidia, to purchase Intel, no formal discussions have taken place between the companies.
The ICD published the first version of this post: Nvidia is far superior to Qualcomm as a suitor.
