Intel to buy out nVidia for $10B!?!

[Quinton McLeod]

Here's the link:
http://today.reuters.com/news/articlene...4413247_RTRUKOC_0_US-NVIDIA-STOCKS.xml

and:

http://www.ocwforums.com/bbs/showthread.php?t=55253


If this is true, then what will become of MB makers concerning nVidia chipsets? Will Intel tell nVidia to no longer supply chipsets for AMD's processors? What about vice versa?

I dunno... AMD buying out ATI was already big... Bug Intel buying out nVidia... I dunno if I can take it!

 

[Furen]

May be. Intel recently invested $10M into the owner of PowerVR (forgot the name) but a $10M investment is hardly a binding investment when dealing with billions of dollars in market share. I do think that AMD got the better deal going for ATI, though, since ATI's "technology" (not to be confused with products) is generally better, and Nvidia is twice the price. One thing that could be huge, though, is that Intel has WAY more available FAB capacity to devote to Nvidia so Nvidia has lots to gain from being acquired by Intel (AMD has NO spare capacity, hehe). Also, Nvidia will not sell for $10B, ATI was worth about $3.5B and AMD had to offer $5.4B to make it worth the stockholders' while. Nvidia IS worth $10B, so I'd expect something in the neighborhood of $12-13B if this thing actually happens.

 

[Zap]

An Intel acquisition of Nvidia wouldn't have that appeal because Intel already sells graphics chips, an area where it has been expanding by hiring engineers specialized in that field

I recall reading about that. Why would Intel be on a hiring spree these last few months if it was just going to buy out Nvidia?

If this does go down, my initial reaction is "OMG the most popular chipsets for AMD..." Then I thought, well, Nvidia gives SLI to Intel but won't contribute much chipset-wise, which is probably a decent chunk of Nvidia sales. Also, Nvidia probably makes a huge amount off AMD because of chipsets and dual video cards. ATI gives AMD chipsets, low and high end GPUs. Nvidia gives Intel... high end GPUs.

The only sane reason to do that would be to spite AMD, and someone would be pretty insane to drop $10b just to do a virtual slap in the face.

 

[swtethan]

Originally posted by: Zap

drop $10b just to do a virtual slap in the face.

dude, intel is badass if they do that

or.. badaxe :laugh:

 

[Furen]

Originally posted by: Zap

An Intel acquisition of Nvidia wouldn't have that appeal because Intel already sells graphics chips, an area where it has been expanding by hiring engineers specialized in that field

I recall reading about that. Why would Intel be on a hiring spree these last few months if it was just going to buy out Nvidia?

If this does go down, my initial reaction is "OMG the most popular chipsets for AMD..." Then I thought, well, Nvidia gives SLI to Intel but won't contribute much chipset-wise, which is probably a decent chunk of Nvidia sales. Also, Nvidia probably makes a huge amount off AMD because of chipsets and dual video cards. ATI gives AMD chipsets, low and high end GPUs. Nvidia gives Intel... high end GPUs.

The only sane reason to do that would be to spite AMD, and someone would be pretty insane to drop $10b just to do a virtual slap in the face.

Not to mention that Intel DOES NOT have 10B in cash, so it'd need to borrow money to give AMD that virtual slap in the face, lol. Nvidia does indeed make way more money on AMD than ATI even dreamed of making on Intel, especially considering that ATI's "short-term partnership" to cover Intel's behind went overboard a few months before AMD announced it was buying ATI.

 

[Bateluer]

Question is, what will happen to video development in the long run? ATI is owned by AMD. Nvidia may be owned by Intel. Intel seems more concerned with shipping various IGPs than performance, feature rich GPUs.

We need another GPU maker to step up. Time for XGI/VIA/SiS to step up to the plate and deliver a high performance GPU.

 

[aka1nas]

It doesn't make a lot of sense as they seem to be already acquiring the talent and IP to do integrated CPU/GPUs without Nvidia. Even for a company as big as Intel, $10 billion in cash is more than they usually would have lying around in liquid form. They don't really gain anything in the chipset space, as integrated Intel graphics are already the most common video solution on OEM PCs. Their new offerings even look like they are starting to improve on integrated 3d performance, and I can see them catching up to ATI and Nvidia solutions in that segment in another product cycle or two.

Intel already has the whole platform strategy thing going, it doesn't need to buy a GPU and chipset developer like AMD did.

 

[sanitydc]

cpu + gpu = 1chip by 2011.

 

[StrangerGuy]

Originally posted by: Bateluer
Question is, what will happen to video development in the long run? ATI is owned by AMD. Nvidia may be owned by Intel. Intel seems more concerned with shipping various IGPs than performance, feature rich GPUs.

We need another GPU maker to step up. Time for XGI/VIA/SiS to step up to the plate and deliver a high performance GPU.

What I feel is that the best way for a competitor to enter the GPU market is to release a fairly-priced, console-like video card that guarantees a constant frame-rate and image quality for supported games which an SKU that stays in the market for at least 4 years...In summary, the best of both PC and console gaming worlds.

Will probably never happen but just to voice out my thoughts.

 

[hans007]

even if it was a share swap they wouldnt do it. not to mention they'd probably have to pay a premium more like 12-13 billion.

there is no way iintel does this. amd bought ATI to have a "platform" .. intel already has one. why bother.

 

[Bibble]

Originally posted by: Zap
The only sane reason to do that would be to spite AMD, and someone would be pretty insane to drop $10b just to do a virtual slap in the face.

Spending $10b+ when you don't need to is not sane, but good point nonetheless.

 

[Viditor]

Can you imagine the DOJ allowing the 2 largest manufacturers of Graphics chips to merge?

 

[dexvx]

Originally posted by: Viditor
Can you imagine the DOJ allowing the 2 largest manufacturers of Graphics chips to merge?

Depends on segment. Although the total market for ATI is around 25%, the discrete segment segment for ATI is more around the 50% mark.

As far as cash is concerned, Intel has a little over $10B in cash as of 2005.

Final Edit:

http://www.xbitlabs.com/news/video/display/20061005003056.html

XBit says Intel has $7.64B in cash

 

[hans007]

how does ati have a total market of 25% and a discrete market of 50%

ati has a higher percentage of total graphics sales than nvidiia.

most igps are ati ones. look at all the notebooks with onboard radeons.

 

[BrownTown]

No, most IGPs are made by Intel, that is why they are the largest graphics manufacturer.

 

[Viditor]

Originally posted by: dexvx

Originally posted by: Viditor
Can you imagine the DOJ allowing the 2 largest manufacturers of Graphics chips to merge?

Depends on segment. Although the total market for ATI is around 25%, the discrete segment segment for ATI is more around the 50% mark.

As far as cash is concerned, Intel has a little over $10B in cash as of 2005.

Final Edit:

http://www.xbitlabs.com/news/video/display/20061005003056.html

XBit says Intel has $7.64B in cash

Overall graphics at the end of Q2 06 show the marketshare breakdowns as:

Intel = 40.3%
ATI = 27.6%
Nvidia = 20.3%

By allowing a merger, the DOJ would be allowing a monopoly in GPUs for a company
that already has a monopoly in CPUs.

In addition, they would be increasing the marketshare of the largest chipset manufacturer substantially, and they would be allowing control of the largest supplier of chipsets for Intel's only major competiter to come under Intel's control...

Somehow, I just don't see any of that happening.

 

[dexvx]

Originally posted by: Viditor
06]http://www.xbitlabs.com/news/video/display/20060731234259.html[/L] show the marketshare breakdowns as:

Intel = 40.3%
ATI = 27.6%
Nvidia = 20.3%

By allowing a merger, the DOJ would be allowing a monopoly in GPUs for a company
that already has a monopoly in CPUs.

In addition, they would be increasing the marketshare of the largest chipset manufacturer substantially, and they would be allowing control of the largest supplier of chipsets for Intel's only major competiter to come under Intel's control...

Somehow, I just don't see any of that happening.

How's that a monopoly? 60.6% of total sales and 50% or so of discrete sales. The bulk of the money is in discrete sales (a $6 billion video market, which of 10% is in integrated sales). If ATI/Nvidia were split EVEN, then ATI would have a 45% stake in total video sales. The DOJ allowed Seagate and Maxtor, #1 and #2 to merge, and they have 40% of the harddrive market. combined (along with MORE than 40% of sales due to Seagate's high margin drives in the Enterprise market).

BTW, I did my calculation based on:

Total: 50% Intel and 50% ATI/Nvidia even split, with Intel taking 0% of the discrete market. And from the Xbit chart, Intel is NOT at 50% total market and ATI leads Nvidia, so thats just a conservative view.

 

[Viditor]

Originally posted by: dexvx

Originally posted by: Viditor
06]http://www.xbitlabs.com/news/video/display/20060731234259.html[/L] show the marketshare breakdowns as:

Intel = 40.3%
ATI = 27.6%
Nvidia = 20.3%

By allowing a merger, the DOJ would be allowing a monopoly in GPUs for a company
that already has a monopoly in CPUs.

In addition, they would be increasing the marketshare of the largest chipset manufacturer substantially, and they would be allowing control of the largest supplier of chipsets for Intel's only major competiter to come under Intel's control...

Somehow, I just don't see any of that happening.

How's that a monopoly? 60.6% of total sales and 50% or so of discrete sales. The bulk of the money is in discrete sales (a $6 billion video market, which of 10% is in integrated sales). If ATI/Nvidia were split EVEN, then ATI would have a 45% stake in total video sales. The DOJ allowed Seagate and Maxtor, #1 and #2 to merge, and they have 40% of the harddrive market. combined (along with MORE than 40% of sales due to Seagate's high margin drives in the Enterprise market).

BTW, I did my calculation based on:

Total: 50% Intel and 50% ATI/Nvidia even split, with Intel taking 0% of the discrete market.

For purposes of anti-trust guidelines, a monopoly is considered to be a company that has an unassailable majority (i.e. greater than 50%), or more importantly is able to create "barriers to entry" in a market. For example, Microsoft was declared a monopoly with 90% of the market...(80% if you include Mac)

In addition:
1. Intel is already in litigation for anti-trust violations internationally, which should tend to keep the DOJ very conservative in it's decision
2. It still allows Intel control of one of AMD's largest platform suppliers (a recipe for absolute disaster)

Edit: To be clear, there is no real percentage legally that determines whether a company is a monopoly or not...not even 100%. What determines a monopoly is whether or not a company can construct "barriers to entry" which would allow it to charge a higher price based on it's market position.
The US Dept of Commerce uses 50% marketshare as it's guideline for monopolies...

 

[dexvx]

Originally posted by: Viditor
For purposes of anti-trust guidelines, a monopoly is considered to be a company that has an unassailable majority (i.e. greater than 50%), or more importantly is able to create "barriers to entry" in a market. For example, Microsoft was declared a monopoly with 90% of the market...(80% if you include Mac)

Edit: To be clear, there is no real percentage legally that determines whether a company is a monopoly or not...not even 100%. What determines a monopoly is whether or not a company can construct "barriers to entry" which would allow it to charge a higher price based on it's market position.
The US Dept of Commerce uses 50% marketshare as it's guideline for monopolies...

To my knowledge, it was sales that is a huge deciding factor as well as market share. For instance, one might STAGGER at the thought that Intel controls traditionally 40-60% of the video market (up and downhill, but its remained somewhat consistent for the past decade). However, that 50% or so market share only equates to roughly 10% of total sales. ATI/Nvidia only make up the other half of the market, but they hold 90% of total sales. I won't even get into actual "profit", as Intel IGP's barely break even. Does Intel have a monopoly even though its by far the graphics leader? Not even close.

Originally posted by: Viditor
In addition:
1. Intel is already in litigation for anti-trust violations internationally, which should tend to keep the DOJ very conservative in it's decision
2. It still allows Intel control of one of AMD's largest platform suppliers (a recipe for absolute disaster)

Every large company has legal issues on this front. Intel/Microsoft have been more or less the target just because they're well known (at the consumer level). However, if you move up to the enterprise front: Cisco, EMC, and a few of the traditional "big iron" companies have sales/market share majority in their prospective industries.

NO ONE is going to doubt Intel/Nvidia if they merge will be a powerhouse on the CPU/GPU front. But IMO, its far from a "monopoly" nor does it create barriers to entry. AMD sorely lacked a chipset division. It picked up ATI (as well as VIA/SiS in the background making 3rd party). This is the technology field, where 1 bad generation of products can indeed screw you over, and 2-3 bad generations can make the dominant market leader into the underdog on the rebound (SGI, Sun Microsystems, IBM, etc).

However, do I see this transaction going through? Personally? No. Intel picked up a defunct 3dLabs team and has had long term investments with PowerVR for a reason.

 

[rdh]

Personally, I think a merger like this stinks.


Intel has shown... through their actions of the past 15 YEARS that they care very little about the graphics market. Even though they are the largest graphics chipset maker, they are in that position only because of crappy embedded graphics chipsets. Had they shown any interest in actually competing or pushing the envelope of graphics capability and performance, I might cheer this development. But if their lackadasical attitude bleeds over to the nvidia side of the house (post merger), then we all lose.

I'm not sure what the market looks like with a combined GPU/CPU. You want a new GPU? Well, now you get to pay for the cost of a new CPU as well! Oh what? They changed the socket/cpu spec or your new MB doesn't support the new chip because of voltages or whatever? You are forced to upgrade MB too. With a standard (like AGP or PCI-e), a MB/CPU combo lasts for a couple generations of GPU.

With a combined GPU/CPU, that model goes away and the consumer either pays more in the end (to have something even close to recent), or else the advancement of graphics development comes to a crawl.

 

[dexvx]

Originally posted by: rdh
Intel has shown... through their actions of the past 15 YEARS that they care very little about the graphics market. Even though they are the largest graphics chipset maker, they are in that position only because of crappy embedded graphics chipsets. Had they shown any interest in actually competing or pushing the envelope of graphics capability and performance, I might cheer this development. But if their lackadasical attitude bleeds over to the nvidia side of the house (post merger), then we all lose.

Because they aren't interested in making mainstream chips? Thats like saying Linksys/Netgear/D-Link products suck because they're not going after the Enterprise networking market.

Is that you, Mark Reign from Epic, posting and crying about how $5 IGP's can't play your games?

 

[knightc2]

Originally posted by: rdh
Personally, I think a merger like this stinks.


Intel has shown... through their actions of the past 15 YEARS that they care very little about the graphics market. Even though they are the largest graphics chipset maker, they are in that position only because of crappy embedded graphics chipsets. Had they shown any interest in actually competing or pushing the envelope of graphics capability and performance, I might cheer this development. But if their lackadasical attitude bleeds over to the nvidia side of the house (post merger), then we all lose.

Intel is very smart to offer integrated graphics in their MBs. They make the chipsets and the GPU and get ALL the revenue. Intel did not, nor do they need to, push the envelope on their integrated solutions because the majority of computer users out there do NOT need high performance GPUs. Joe business user does not play 3D games. Intels integrated solutions are aimed at mainstream and business PCs where GPU power is not an issue. Why compete with nVidia and ATI in the high performace arena when the majority of computers will not need a high performance GPU.

Now, it may be smart for Intel to purchase nVidia in light of the recent AMD/ATI buyout to strengthen its overall share of GPUs. Then they have 2 divisions. The mainstream, high profit integrated division using Intels chipsets and the high end performane division using nVidia chipsets/GPUs. It is a win win for Intel IMO.

 

[RichUK]

I don?t know what to make of this. Is this going to put the dampers on the AMD /ATI relationship or what. I mean Intel has a wealth of knowledge with IGP?s, and with the addition of nVidia's tech, well.... They could corner the HTPC market. And its not as if they need help creating chipsets, as does AMD, as Intel already produce the best.

I wonder what Intel?s hidden agenda is :evil:

 

[Viditor]

Originally posted by: RichUK
I don?t know what to make of this. Is this going to put the dampers on the AMD /ATI relationship or what. I mean Intel has a wealth of knowledge with IGP?s, and with the addition of nVidia's tech, well.... They could corner the HTPC market. And its not as if they need help creating chipsets, as does AMD, as Intel already produce the best.

I wonder what Intel?s hidden agenda is :evil:

I wouldn't worry about it...there is no possible way that Intel will be allowed to do it, whether they want to or not.

 

[SparkyJJO]

Originally posted by: RichUK
I don?t know what to make of this. Is this going to put the dampers on the AMD /ATI relationship or what. I mean Intel has a wealth of knowledge with IGP?s, and with the addition of nVidia's tech, well.... They could corner the HTPC market. And its not as if they need help creating chipsets, as does AMD, as Intel already produce the best.

I wonder what Intel?s hidden agenda is :evil:

Intel is just a big control freak. Wants everything, even going so far as to threaten ruin to other companies to make sure they stay on top (HP, for example, couldn't even touch free AMD CPUs for fear of intel's wrath). I don't mind big businesses, but what I do mind is when they throw their weight around.