On Monday, unconfirmed reports revealed Nvidia (NVDA) plans to create central processing units (CPUs) to compete with Intel (INTC).
Nvidia stock surged by 3.84% to $429.75 apiece on October 23. Moreover, market watchers predict an additional 0.69% lift to $432.71 per share in the coming session.
The dominator of the global artificial intelligence (AI) chips market has begun designing CPUs for Microsoft (MSFT) personal computers (PCs). NVDA plans to use Arm Holdings (ARM) technology to build chips specially designed to run the Windows operating system.
Arm Holdings has a historied relationship with the semiconductor manufacturer and distributor. In 2020, Nvidia announced its bid to buy ARM for $40.00 billion, but negotiations collapsed in 2022.
Moreover, the two companies collaborated in 2021 to combine Nvidia graphics processing units (GPUs) with flexible, energy-efficient Arm architecture. However, the partnership was centered on developing systems for data centers and generative AI (GenAI) large language models (LLMs).
Microsoft supports Nvidia and other chipmakers in designing Arm-based chips for Windows PCs, in part to derail Apple (AAPL). In recent years, Apple’s proprietary Arm-based Mac chips have increasingly threatened Microsoft’s monopoly of the PC consumer market.
MSFT first tested the initiative with Qualcomm, granting it an exclusivity deal until 2024. NVDA, along with Advanced Micro Devices (AMD), will lead the new batch of collaborators once the exclusivity expires.
Intel Stocks Amid New Nvidia PC Chip Project
News of a new competitor dragged Intel stock down by -3.06% to $33.85. INTC controls most of the PC chips market, with over half its June quarter revenue coming from desktop chip sales.
Even before the reports, Intel had already struggled with a significant demand slowdown as more competitors appeared. Meanwhile, Nvidia’s market cap has grown to $1.06 trillion thanks to a worldwide monopoly of the advanced AI chip market.
Intel Chief Executive Officer (CEO) Pat Gelsinger promised renewed efforts to reclaim the company’s market share and technological edge. Gelsinger added they are gearing up for 2025 when NVDA and AMD release their new PC chips.
