Potential benefits and potential risks for Asian chip manufacturers rest with Intel's Nvidia acquisition deal
In a significant move for the tech industry, Intel and Nvidia have announced a partnership aimed at enhancing their respective positions in artificial intelligence (AI) and semiconductor manufacturing.
According to Dan Nystedt, vice-president at TriOrient, Intel's entry into the foundry business is expected, though it may take time to reach scale. The partnership with Nvidia is expected to help Intel make up some ground in AI and boost its manufacturing capabilities. This announcement has sent Intel's shares soaring by 23%.
The partnership is also a concern for Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's leading chipmakers. Analyst Lib-Bu Tan believes that the biggest risk for TSMC from the contract between Nvidia and Intel is that Intel could strengthen its manufacturing technology base, potentially leading Nvidia to outsource chip production to Intel.
The immediate concern for TSMC could be a loss of business from AMD, a competitor to both Intel and Nvidia in the data center chip market. However, for TSMC, an Intel that is chugging along is a better proposition than one that fails, according to analysts.
The U.S. government has shown interest in Intel becoming a manufacturer of advanced semiconductors for reasons of national security. Meanwhile, TSMC and other Asian chip powerhouses like South Korea's Samsung Electronics are building multi-billion-dollar plants in the U.S. due to pressure from the U.S. administration.
The partnership between Intel and Nvidia does not currently involve Intel's contract chip manufacturing business. However, some investors speculate that the partnership could potentially lead to manufacturing deals in the future, posing a potential threat to TSMC.
Analyst Moon Joon-ho at Samsung Securities views the partnership as bad news for Intel's competitors, as it could lead to Intel improving its competitiveness and the possibility of Nvidia outsourcing chip manufacturing to Intel.
The two companies have agreed to jointly develop PC and data center chips. This collaboration could put Intel's next-generation manufacturing technology on a stronger footing, helping it revive its fortunes. AMD, however, remains optimistic about its AI-forward strategy, with a spokesperson stating that the company will continue to drive market share growth.
The development of the chipmaking landscape remains uncertain, according to Han Kyu-min, director at the Korea Fabless Industry Association. Asian chipmakers' shares were steady on Friday, with TSMC falling 1.6% and Samsung dropping 1%.
In conclusion, the Intel-Nvidia partnership marks a significant step for both companies, potentially reshaping the semiconductor industry landscape. As Intel strengthens its manufacturing capabilities and AI prowess, the future of TSMC and other Asian chipmakers could be impacted.
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