Nvidia mulls Intel contract for Semiconductor industry

Nvidia founder and CEO Jen-Hsun Huang said in a call with reporters Tuesday night that his company would consider using rival Intel Corp. At a media conference earlier in the day, Huang told China Business News that Nvidia's current major contractors include TSMC and Samsung, without mentioning Intel.

Intel shares rose as much as 2.5 per cent after Mr Huang's latest comments before closing lower.

Huang expressed interest in using Intel foundry, according to a transcript of nvidia's media conference obtained by China Business News. But he added: "The contract manufacturing discussion will take a long time because it involves integrating the supply chain."

Huang's comments also mark a deepening of cooperation among semiconductor industry players to tackle chip supply chain issues.

Competitors explore cooperative models

Early last year, Intel decided to expand beyond designing chips into contract manufacturing, helping partners (including competitors) produce chips, and announced several projects in Europe and the United States worth billions of dollars. Intel has already announced customers including Qualcomm and Amazon.

Intel is trying to catch up with industry leaders TSMC and Samsung. TSMC has announced investment of more than $100 billion over the next three years to expand capacity; Samsung has also said it will invest $150 billion to expand production by the end of the decade.

Discussing the chip supply chain, Huang told China Business News on March 23 that Nvidia's strategy of diversification, whether in chip manufacturing process or foundry, has helped the company remain resilient despite tight supply chains. Nvidia's newly released gpus with new architecture use TSMC's 4nm production process.

"Our suppliers include TSMC, which is still the best performing foundry globally, and we are also working with Samsung." Huang Renxun told China Business News.

Asked if Nvidia was worried about teaming up with a competitor like Intel, Huang said: "We've had a long relationship with Intel in many areas and we know each other well."

Some analysts suggested that Huang's mention of a partnership with Intel might have been "pleasantry". "Intel is a choice for Nvidia, and it doesn't cost them anything to say." "But you still don't know anything about how they will work together," Bernstein analyst Stacy Rasgon commented.

"Any possibility exists," Gartner analyst Sheng Linghai told China Business News. "For Intel, it urgently needs to use the x86 architecture to attract OEM customers, or it will soon be overtaken by ARM."

X86 cpus are still dominant, but Nvidia's latest release, the Grace CPU Superchip, is based on the ARM architecture. Nvidia's previous bid for ARM failed to pass antitrust scrutiny.

Shortages of critical equipment will continue

On March 23, Intel CEO Pat Gelsinger and other industry representatives took part in a SENATE hearing on the chip supply chain. According to a deposition released ahead of the hearing, Intel called on the government to encourage private sector investment to achieve a resilient and innovative semiconductor ecosystem.

Analysts expect the global chip market to double to $1 trillion by 2030. Intel said last week it would invest about €33bn in manufacturing and research in Europe, depending on demand, rising to €80bn by the end of the decade. It also announced plans to invest $40 billion to expand chip manufacturing in the United States.

At present, the upstream and downstream supply chains of the semiconductor industry are also working together to solve the problem of chip supply and chip equipment shortage. Geisinger said Intel has approached the lithography giant directly and sent its own manufacturing experts to help ASML speed up production of the machines.

ASML dominates the global market for lithography machines used to make advanced semiconductors. The chipmaker's multibillion-dollar expansion plans are expected to be limited by shortages of critical equipment over the next two years as supply chains struggle to ramp up production, CHIEF Executive Peter Wennink warned on March 21.

"Expanding capacity in the supply chain will still take some time, as many of the new manufacturing facilities will not come online until 2024," Mr Venningk said.

ASML has more than 700 product-related suppliers worldwide, of which more than 200 are key suppliers. For example, the most complex component in ASML's equipment is the lens made by German manufacturer Carl Zeiss. "In order to make more lenses, Carl Zeiss had to build clean rooms, get permits, organize the construction of a new factory, and hire people. It takes more than a year to make the camera after receiving an order. "Vennink said.