Intel & Nvidia – Landscape Gardening

Partnership does not materially change the landscape.

• While Nvidia’s partnership with Intel has increased optimism on the outlook for Intel, Nvidia’s GPUs will not fix the disadvantages of the x86 processor, meaning that this, on its own, does not represent a potential comeback for the x86 instruction set.
• Nvidia and Intel announced a partnership last week where each will use the other’s product and where Nvidia will invest $5bn in Intel to help shore up its balance sheet.
• The partnership comes in two parts:
  • First, datacentre: where Nvidia will build a custom CPU based on x86 that can be used instead of Vera in the next generation of products.
  • This marks a big step up for x86, which previously could only work in the PCIE configuration and was limited to NVL8 (8 GPUs networked together so they can perform as one).
  • Nvidia will buy x86 CPUs from Intel and include them in a custom design that works with the latest NVL72 system that will be shipping in H2 2026.
  • It is important to note that, unlike the other custom non-Nvidia CPUs that can now be used with Nvidia GPUs, this will not break compatibility with CUDA, making it an easy choice for any customer that prefers x86.
  • Hence, clients will now be able to choose to use either x86 or Arm in their Nvidia clusters with full software compatibility and given that much of the cloud still runs on x86, this will be attractive for many customers.
  • Second, PCs: where Intel will purchase chiplets from Nvidia and incorporate them into its processors to address the integrated GPU market.
  • Intel will either buy the physical chiplets or manufacture them to Nvidia specifications, together with its own CPU.
  • These products would then be distributed in the normal way, with the only real change being a flip from an in-house integrated GPU to an Nvidia version.
• This partnership means the end of Intel’s in-house GPU and its AI ambitions, which, given the dreadful state of its finances, is probably a good thing.
• It was also clear from the commentary that Nvidia is under no obligation to make anything in Intel’s foundry, indicating to me that it is Nvidia that is in the driving seat of this partnership.
• This partnership and the investment from Nvidia have given Intel a substantial boost both financially and in terms of credibility, but it does nothing to fix the problem with its x86 processor.
• With every successive M series chip and with the Snapdragon new X2 Elite and X2 Elite Extreme, x86 processors look increasingly obsolete, especially when laptops are unplugged from the wall, which is something Intel and AMD don’t like doing.
• For example, the X2 Elite extreme claims 44% more performance than x86 at the same level of power consumption, and that x86 consumes 222% more power when running at peak load.
• Nvidia’s best GPUs will do nothing to fix this, and in practice, this means that the marketing line of “same performance with double the battery life” will continue to be true.
• This means that other than playing more games and having better graphics performance, Nvidia will do nothing to fix x86’s problems.
• Nvidia was clear that this deal makes no difference to all of the Arm projects that it is working on, like the N1 chip with MediaTek.
• Hence, I would not be surprised at some point to see this deal replicated with a Windows on Arm vendor.
• Top of the list would have to be MediaTek (which is supposed to have something in the works already), but I am increasingly of the opinion that AMD may launch a Windows on Arm processor at some point, as the writing is on the wall, even if it does take a long time to become reality.
• The net result is that this will allow Intel to be a slimmer, more focused organisation, although it has had to admit that it has missed three of the last great technological innovations (mobile, accelerated computing and AI).
• This also does nothing for Intel’s foundry, and I continue to think that it is in a precarious position. but its geopolitical importance means that the factories will still be making chips even if they don’t have an Intel badge on the wall.
• There is no real impact for Arm either. which has gained market share outside mobile on its merits, and as this partnership does nothing to fix x86, its outlook remains unchanged.
• The real winner is Nvidia, which has seen a handsome return on investment already, thanks to lending Intel some of its shine and because it replaces a competitor (Intel GPUs) and addresses the new segment of integrated GPUs.
• It is fairly neutral for everyone else as this does not fix x86, and there is nothing to stop Nvidia addressing the iGPU market for Windows on Arm with MediaTek, AMD or even Qualcomm at some stage.
• Hence, I don’t think Intel has a new lease of life and would use this opportunity to minimise my losses (if I had any) before the shine wears off.