This article first appeared on GuruFocus.
Nvidia (NVDA, Financials) is betting big on Intel (INTC, Financials). The world’s most valuable chipmaker is investing $5 billion for about a 4% stake in Intel and teaming up to develop new PC and data center chips.
The deal immediately lit up Wall Street. Intel shares soared 23% as investors cheered the prospect of new life for a company that has struggled to keep pace with rivals. For Nvidia, it’s a chance to deepen ties with a potential partner while tightening its grip on the fast-growing AI market.
For Asian chipmakers, though, the picture is more complicated. Taiwan’s TSMC still produces the vast majority of AI chips, including those designed by Nvidia. Some analysts say a healthier Intel actually helps TSMC by spreading U.S. government support and easing political pressure.
Others warn that if Intel eventually wins Nvidia’s manufacturing business, it could chip away at TSMC’s dominance.Samsung is in a similar spot. Both it and TSMC are building costly plants in the U.S. under government pressure. Their shares dipped Friday TSMC down 1.6%, Samsung off 1% as investors weighed the longer-term threat.
Another company caught in the middle is AMD. Analysts said tighter cooperation between Intel and Nvidia could hurt AMD’s server chip sales, since Nvidia is essentially pulling Intel closer in its fight against a key rival.
