Looming acquisition deals could put Intel’s leading position in jeopardy.
The COVID-19 pandemic has created skyrocketing demand for semiconductors as companies accelerate toward digital transformation, Cloud-based remote working and increased data analytics.
Emboldened by what they see as a booming market, chip makers AMD and Nvidia are making brazen plays to challenge the historical leader in their sector, Intel.
AMD plans to acquire Xilinx
AMD has traditionally taken a back seat to Intel in the computer-processor market. The company announced on Tuesday that it would buy San Jose, Calif.-based chip maker Xilinx for $35 billion.
“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” AMD President and CEO Dr. Lisa Su said.
Nvidia to buy chip-designer Arm
Nvidia, which has been a powerhouse in the graphics processor sector, has agreed to buy U.K. chip-design specialist Arm from SoftBank Group Corp. for $40 billion in cash and stock. This would be the industry’s largest deal to date. The acquisition would extend Nvidia’s reach into the rapidly growing smartphone market.
Jensen Huang, the CEO of Nvidia, sees that deal propelling them into the AI era. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI”, said the CEO.
Regulatory challenges ahead?
The AMD and Nvidia deals both still need to pass regulatory scrutiny in the U.S. and abroad. However, if they are approved, the transactions would put both companies on a more even footing with Intel.
Regulators and geopolitical tensions also could undo the proposed deals. This has, after all, happened before. The Trump administration blocked what would have been the industry’s biggest transaction to date, namely the proposed $117 billion hostile takeover of Qualcomm by rival Broadcom Inc.
In addition, Chinese technology companies are actively pressuring regulators to block Nvidia from acquiring Arm.
However, should the deals eventually pass regulatory muster, they would signal a major repositioning of the US semiconductor market.