Analysts scoff at rumor of Intel-Nvidia deal

Antitrust issues, bad blood and merger complexity should put kibosh on an acquisition

While rumors are swirling around the Internet that Intel is looking to buy rival chips maker Nvidia, analysts say it's nothing but talk and bluster.

Tech columnist Robert X. Cringely stirred up quite a bit of talk earlier this week when he posted a blog saying that Intel dropped plans last week to launch its long-anticipated graphics processor Larrabee because the upcoming chip was a stumbling block to Intel's secretive plans to buy Nvidia, which leads the GPU market . Since launching Larrabee would have moved Intel into the GPU (graphics processing units) market and upped the chip maker's competition against Nvidia, it had to scrap the graphics chip to save a potential deal.

"There is a funky dance going on right now between chip giants Intel and Nvidia and I just want to cut through the crap and tell you that no matter what the companies are saying, it is likely to end with Nvidia being purchased by Intel," Cringely wrote on Tuesday. "Both parties know it and the only thing that hasn't been determined yet is the price, which is what all this posturing is about."

Both Intel and Nvidia said they would not comment on rumors.

Analysts, however, were quick to comment, and nearly all of them said that although Intel was looking at possibly buying Nvidia a year ago, there's very little chance that it would ever happen.

Several issues stand in the way of such a major acquisition. First, the U.S. government and the European Union might have antitrust reservations about a purchase of this magnitude. Secondly, it's well known that, with legal and openly verbal clashes between the two companies, there is little love lost, and it would take impressive negotiations to reach an agreement that would satisfy both companies.

"There are some cultural concerns. They are fairly antagonistic to each other. Getting everyone under one roof would be a challenge," said Dean McCarron, principal analyst at Mercury Research.

Several analysts noted that both companies are so big that combining them would be prohibitive.

"No, this wouldn't happen," said Rob Enderle, an analyst with the Enderle Group. "Nividia is too large and the execs hate Intel. And Intel doesn't have the merger competency to do a big one and the culture conflicts would critically damage both firms... Though that would be the best Christmas present that AMD could imagine - critically damage both of those companies."

While most industry watchers don't see the rumor as having any real legs, Dan Olds, an analyst with The Gabriel Consulting Group, said that if the acquisition went through and the dust settled, Intel would be an even greater force to reckon with.

"This would essentially give Intel control over most of the more profitable pieces of the personal computer -- the main processor and the graphics processor," Olds said. "Of course, there is still AMD/ATI, but with Nvidia, Intel would have the lion's share of the market. It would put Intel in the driver's seat in terms of control over the personal computing platform. It would also give it much more control in a very important segment of the scientific/technical high performance computing market."

And if the buyout went through, AMD would be put in a tough position.

AMD, even though it's been boosted by its purchase of ATI, had been ahead of Intel several years ago but lost its momentum and its top position in the chip market. Plagued with financial issues and roadmaps that were behind Intel's faster pace of big chip releases, AMD has had its feet to the flame for quite some time.

While such a major purchase might trip up Intel financially for several years and give AMD a chance to regain lost momentum, facing down a bigger, more complex Intel down the road isn't a position that AMD would relish in the long term.

However, Jim McGregor, an analyst with In-Stat, said debating how AMD would respond is largely a mute point. The acquisition simply won't happen.

"I just don't believe that this will ever happen," McGregor said. "Intel already has a large graphics group and three graphics architectures in production or development. That's in addition to the fact that the two companies don't get along and there are outstanding legal issues. It just won't happen."

Agam Shah of the IDG News Service contributed to this article.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags intelAMDnvidiaati

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sharon Gaudin

Computerworld (US)
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?