In a surprising development in the US semiconductor industry, Nvidia has beaten Intel to become the most valuable chipmaker in the United States for the first time.
The company’s shares rose 2.3% on Wednesday to a record $404, to push its market capitalization to $248 billion, $2 billion above Intel’s $246 billion value, according to Reuters.
US chipmakers have suffered a hit following the emergence of COVID-19 that resulted in the S&P low on March 23. But Intel was coming out of it coldly while Nvidia has enjoyed a relative growth that has put it ahead.
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Intel’s stock has lost almost 3% in 2020; Nvidia’s witnessed a 68% growth. The growth has been attributed to the evolution of remote work by investors who believe that the coronavirus pandemic will continue to spur Nvidia’s datacenter business to fast growth.
Datacenters have boosted Nvidia’s performance in Wall Street ever since it moved concentration from chip making to automobiles, artificial intelligence and datacenters. Unlike Nvidia, Intel has been fully focused on PC processors and servers, failing to diversify its business. Even an attempt in mobile phone production failed.
Global competition in the semiconductor industry has also contributed to the failings of Intel. As the Chinese government pushed to cut its dependence on US made chips by pumping billions into manufacturing of semiconductors, the market capitalization of Intel began to fall below South Korea’s Samsung Electronics and Taiwan Semiconductor Manufacturing Co.
Reuters said that despite the stock rise of Nvidia, its sales remain a fraction of Intel’s. But analysts on average see Ndivia’s revenue rising 34% in its current fiscal year to $14.6 billion, while they expect Intel’s revenue to increase 2.5% to $73.8 billion.
Intel’s woes are even getting compounded as Apple announced it is divorcing Intel’s chip. Apple said it will henceforth make use of its own chips in its Mac computers in favor of Intel’s Silicon.
The different strategies embraced by Intel and Nvidia are yielding different results. Intel lost its title as the most dominant chipmaker in Silicon Valley, while Nvidia took advantage of the situation. Moreover, the odds appear to be in favor of Nvidia.
“What’s notable about Nvidia is that the graphics chips it sells for AI projects weren’t originally designed for that purpose. Still investors clearly believe that Nvidia, which also provides chips for gaming and for servers that run in corporate data centers, has lots of room to grow,” said Nick Wingfield.
Intel has been trying to formulate an AI strategy that included the $1.7 billion acquisition of fellow chipmaker Altera and autonomous vehicle technology developer MobileEye, which it acquired for $15.3 billion. But the strategies appear not bright enough to attract the commendation of Wall Street.
Other matters have paved the way for AMD to find a place in the competition. The company has adopted a strategy that relies on emulating CUDA and adoption of its ROCm platform.
Extremetech noted however, that the performance situation of ROCm continues to favor Nvidia, with AMD’s GPUs generally slower than their Team Green counterparts. Given that AMD is effectively performing code translation, that’s not too surprising.
Meanwhile, Intel is still fighting to establish itself in these new markets. The company’s server-side business has done excellently well in recent years, though not enough to catch the attention of Wall Street. Intel bought Havana Labs last year and effectively relaunched some of its AI efforts from scratch, though they have not started to yield fruitful results.
Intel’s CPU-centric efforts have focused on integrating capabilities like AVX-512 and bfloat16 into its CPUs, the latter of which debuted in top-end server CPUs this year with the launch of Cooper Lake.
On the other hand, AMD has focused most of its efforts on the CPU side of the equation for now, while Nvidia has had the scientific side of the business largely to itself. Extremetech noted further that there may be changes in the future, with AMD talking about its CDNA compute architecture, but it’s not surprising to see Nvidia in this position.