In early July, Nvidia became America’s #1 chipmaker by market cap, surpassing its much older rival, Intel, for the first time.
Today, Nvidia is worth $300B while Intel is worth $210B. And with reports that Nvidia is set to acquire UK-based chip designer ARM from Softbank for $40B, that gap might grow even bigger.
Founded in 1993, the Santa Clara-based firm has seen its value increase ~22x in the past 5 years. This is largely thanks to several major developments:
Founded in 1968, Intel came to dominate the PC market in the 1990s and early 2000s.
However, the success of Intel’s PC business hamstrung efforts to effectively compete in the lower margin (but much faster growing) smartphone chip market. With PCs on the decline, Intel’s growth has become reliant on high-end data centers (which Nvidia is increasingly encroaching on).
Two further blows hit in 2020:
ARM’s energy-efficient designs have been used to create 160B chips — and buying the firm would boost Nvidia’s position in smartphones, tablets and internet-of-things (IOT) hardware.
However, the Wall Street Journal notes some potential deal roadblocks:
We have a more pressing question. If the deal happens, which portmanteau is better: NvARM or Armidia?