Nvidia’s enormous success with sales of GPUs for GenAI tasks and more has engendered a flurry of competitive activity from startups to major players, not the least of which is, reportedly, a possible partnership between giants Intel and SoftBank.
Multiple cloud players are already building their own GPUs and other accelerator SoCs or platforms but Nvidia still holds more than 85% of the GPU market, with some of its GPUs selling for $50,000 apiece with buyers planning to build out data centers with hundreds of thousands of the Nvidia devices.
Amid this activity, Financial Times recently reported that Intel and Japan’s SoftBank held talks, now failed, to produce an AI chip to compete with Nvidia. The plan foundered after Intel struggled to meet the Japanese group’s requirements for speed and volume of production of AI chips, according to unnamed sources FT spoke to.
The thinking behind the Intel-SoftBank partnership was to allow SoftBank access to US CHIPS Act funding, which includes more than $8 billion in a preliminary agreement for a direct payment to Intel in the form of a grant, along with billions more in loans.
SoftBank CEO Masayoshi Son has talked with major banks about raising up to $10 billion to fund energy-related projects, according to sources that spoke to The Information. FT said his long term plans include providing data centers with both AI chips and electricity to run them.
Son’s plan with Intel would have moved SoftBank’s Arm entity (of which SoftBank owns 90%) into chip production at the same time Nvidia is a client of Arm, which could potentially damage Arm and SoftBank’s relationship with Nvidia. But FT’s sources said that risk was worth the reward.
None of the parties involved in the reported talks have commented. While the story is unverified by official sources, it is entirely believable, analysts said, given Son’s investment activism in years past and Intel’s strong desire to grow and attract foundry customers.
Of note: the talks between SoftBank and Intel reportedly took place and failed well before Intel’s recent announcement to cut 15,000 jobs in a cost-cutting move. Intel also had been a big financial backer of Arm during its IPO a year ago, but Intel recently disclosed in a regulatory filing it had sold its stake in Arm in the second quarter, raising $150 million. Intel stock has lost 57% in 2024.
The full plan for Intel’s $10 billion cost-cutting plan and its 15% reduction in jobs appears to be slowly taking shape. While Intel adjusts to devastating blows, the FT report suggested Intel could still play a role in a partial partnership with SoftBank if SoftBank’s ongoing talks with chipmaker TSMC result in needing some of Intel’s expertise in chip design.
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