Nvidia's investment in Intel may prove advantageous for KLA Corporation and other manufacturers of chip equipment, according to UBS.
In a surprising turn of events, tech giants Nvidia and Intel have announced a strategic partnership that could reshape the semiconductor industry. The collaboration, dubbed "Nvidia And Intel: Beauty And The Beast Team Up," has received a positive evaluation from UBS analyst Timothy Arcuri.
Nvidia has invested $5 billion in Intel, with the funds earmarked for the development of PC and data center chips. This investment is expected to increase the likelihood of Intel building a viable foundry business, according to UBS. However, it does not significantly affect Intel's spending for the C2026 period.
The partnership will see both companies relying on TSMC in fabricating chips for data center and PCs. This move is significant as it could potentially challenge the dominance of Taiwan Semiconductor Manufacturing Company (TSMC) in the market.
Despite the potential positive impact on Intel, UBS believes that this partnership could potentially be negative for Advanced Micro Devices (AMD) over a 3 to 4 year time horizon. The reasoning behind this is that the investment does not help Intel's product roadmap, as it is more focused on the foundry side. Over a longer term, if investments like this accelerate Intel's separation of the product business and allow it to use TSMC, it could potentially be even more detrimental to AMD.
UBS analyst Timothy Arcuri has maintained a Neutral rating on Intel but increased the price target to $35 from $25. He also believes this investment is positive for semiconductor equipment makers, particularly KLA Corp.
The longer-term capital expenditure outlook for Intel is improved due to this investment. However, it's important to note that the chief analyst at UBS who positively evaluated the collaboration between Nvidia and Intel for KLA Corporation is not explicitly named in the search results.
Nvidia has also made another significant investment, this time in the UK AI startup scene, to the tune of £2B. This move underscores Nvidia's commitment to AI technology and its potential to drive innovation in the semiconductor industry.
As the dust settles on this exciting partnership, the semiconductor landscape is poised for significant changes. The impact on AMD and the broader industry remains to be seen, but one thing is certain: the collaboration between Nvidia and Intel is a game-changer that could reshape the industry for years to come.
