Nvidia, Intel Partner to Reshape AI PC Market with $1B Investment

Chip giants Nvidia and Intel have announced a strategic partnership, investing 500 million dollars in each other's companies. This collaboration aims to jointly develop next-generation data center and client processors, potentially reshaping the AI PC market landscape. The partnership is expected to bring significant changes to the market, with Intel's x86 CPUs combined with Nvidia's graphics technology, which could lead to a more powerful product combination for AI workstations.

According to the analysis, the first batch of products is expected to be manufactured by Taiwan Semiconductor Manufacturing Company (TSMC), highlighting TSMC's leading position in the high-performance computing wafer foundry sector. The collaboration between Nvidia and Intel is primarily focused on product design rather than manufacturing, which means that TSMC's short-term risks are limited. However, in the long run, Nvidia may consider having some of its products manufactured by Intel. For TSMC, facing some competition in the advanced process field may be a more ideal situation compared to the continuous government scrutiny due to its absolute dominant position.

In contrast, MediaTek faces clear negative impacts from this collaboration. MediaTek's cooperation with Nvidia in the computing and automotive sectors has been a key strategic pivot for its diversification into these new markets. However, with Intel's entry, MediaTek's exclusive cooperation with Nvidia in the PC sector will no longer be the case, limiting its long-term development potential, especially in the Intel-dominated PC market. The combination of Intel's x86 CPUs and Nvidia's GPUs is expected to be more competitive in areas such as AI workstations. In contrast, the Windows on ARM ecosystem based on the Arm architecture has lagged behind market expectations over the past 12-18 months.

Despite MediaTek's first PC chip, the GB10, which is set to be mass-produced in collaboration with Nvidia, its future prospects are now clouded. The AI PC market, as a new category, has seen slow market growth. This is largely due to the insufficient NPU performance in Intel's previous products, such as the Meteor Lake and Arrow Lake processors, and the lack of widespread response from PC manufacturers to its new Lunar Lake processor. Meanwhile, CPU suppliers in the Windows-on-ARM camp, such as Qualcomm, have also failed to achieve strong growth.

If Intel can leverage Nvidia's graphics and AI technologies to launch more competitive products at a faster pace, it could potentially spark a stronger AI PC product cycle. The impact of this collaboration on the Asian semiconductor supply chain is mixed. Companies related to Intel's products are expected to benefit more significantly. However, since the collaboration does not involve new wafer foundry businesses, semiconductor equipment suppliers related to Intel's foundry business may only see a slight upward trend. The market's expectations for Intel's increased spending remain to be seen, pending more customer confidence in its 14A process.