Intel’s new chip will go head-to-head with Nvidia and AMD
Intel unveiled new computer microchips on Thursday 14th December 2023, including Gaudi3, a chip for generative AI software.
Intel also announced Core Ultra chips, designed for Windows laptops and PCs, and new fifth-generation Xeon server chips. Intel’s server and PC processors include specialized AI parts called NPUs that can be used to run AI programs faster.
AI race
AI models, like OpenAI’s ChatGPT, run on Nvidia GPUs in the cloud. It’s one reason Nvidia stock has been up nearly 230% year to date while Intel shares have risen 68%. And it’s why companies like AMD and, now Intel, have announced chips that they hope will attract AI companies away from Nvidia’s dominant position in the market.
Gaudi3 will compete with Nvidia’s H100, the main choice among companies that build huge factories of the chips to power AI applications, and AMD’s forthcoming MI300X, when it starts shipping to customers in 2024.
CEO Gelsinger
‘We’ve been seeing the excitement with generative AI, the star of the show for 2023,’ Intel CEO Pat Gelsinger reportedly said at a launch event in New York where he announced Gaudi3 along other chips focused on AI applications.
Intel upping the anti with its Gaudi AI chip. The AI PC to become the new AI start of 2024 and beyond!
‘We think the AI PC will be the star of the show for the upcoming year,’ Gelsinger added. And that’s where Intel’s new Core Ultra processors, also announced on Thursday, will come into play.
Meta, OpenAI, and Microsoft said they will use AMD’s newest AI chip, the Instinct MI300X.
An indication that tech companies want alternatives to the expensive Nvidia graphics processors that have been essential for artificial intelligence (AI).
If the MI300X is good enough and inexpensive enough when it starts shipping early next year, it will likely lower costs for developing AI models.
AMD CEO Lisa Su projected the market for AI chips will amount to $400 billion or more in 2027, and she said she hopes AMD has a sizable part of that market.
Wall Street rallies on AMD and Google AI news
Wall Street resumed its rally after a short break as technology giants intensified their AI race, pushing up tech stocks.
When you witness Google launching a new AI model (Gemini) and AMD chasing a slice of the hot AI chip market, you know a pre-Christmas cheer will wash over investors.
To think, just a handful of years ago, other than in Science Fiction novels, the term ‘artificial intelligence’ didn’t exist in our vocabulary and now it is becoming more and more integrated with our day-to-day lives.
Stockmarkets love it. AI is fast becoming a business necessity and not just an option.
Wall Streets love affair with AI – how long will it last?
The curbs are aimed at closing loopholes that became apparent after the U.S. announced export curbs on microchips in October 2022. The restrictions are designed to prevent China’s military from importing advanced semiconductors or equipment.
Nvidia has said in a filing that the new export restrictions will block sales of two high-end artificial intelligence chips it created for the Chinese market – A800 and H800. It said that one of its gaming chips will also be blocked.
Nvidia Corp one month chart – closed at 439.38 17th October 2023
Although the curbs also affect other chip makers, analysts believe Nvidia will be hit the hardest because China accounts for up to 25% of its revenues from data centre chip sales. Nvidia’s shares, which are considered a star stock, fell by as much as 4.7% in the wake of the announcement.
Semiconductor Industry Association
The Semiconductor Industry Association, which represents 99% of the U.S. semiconductor industry by revenue, said in a statement that the new measures are ‘overly broad‘ and ‘risk harmingthe U.S. semiconductor structure without advancing national security as they encourage overseas customers to source elsewhere’.
China reacts
A spokesperson for the Chinese embassy also said that it ‘firmly opposes‘ the new restrictions, which also target Iran and Russia and go into effect in 30 days.
Nvidia stock falls after restrictions on AI chip exports from U.S. to China
Two months ago, China retaliated by restricting exports of two materials, gallium and germanium, which are key to the semiconductor industry.
The materials are ‘minor metals‘, meaning that they are not usually found on their own in nature, and are often the by-product of other processes. It’s not only the U.S., Japan and the Netherlands – which is home to key chip equipment maker ASML – have also imposed chip technology export restrictions on China.
Fallout
The constant ‘fall-out’ between the world’s two biggest economies has raised concerns over the rise of so-called ‘resource nationalism‘ – a practice where governments hoard critical materials to exert influence over other countries.
Chip design firm Arm on 5th September 2023 submitted an updated filing for its upcoming initial public offering on the New York Stock Exchange, setting a price range between $47 and $51. Only 9.4% of Arm’s shares will be freely traded on the NYSE.
Arm was previously listed in London and New York, before SoftBank acquired it for $32 billion in 2016.
Chip design firm Arm on Tuesday is looking to acquire as much as $4.87 billion in its upcoming initial public offering on the New York Stock Exchange, according to the new filing.
The deal could value the company at as much as $52 billion
As a British company, Arm qualifies as a foreign private issuer in the U.S. and its shares will count as American depositary shares, or ADS’s. It is reported that the company will list some 95.5 million ADS’s at a price range of between $47 and $51. At the upper end of that range it is estimated that Arm will likely raise up to $4.87 billion. At the lower end, the IPO would fetch $4.49 billion of fresh capital for Arm. It could do even better.
Institutional funds
When the company floats in New York, it will look to enjoy a very deep pool of professional institutional funds. Arm seeks to ramp up its investments in research and development, particularly as it pursues growth in the artificial intelligence (AI) space with some of its newer chips. The company recently released new chips specifically targeted at AI and machine learning use cases.
Arm seeks up to $52 billion valuation in U.S. IPO
Upper end
At the upper end of the pricing range, Arm would also touch a total valuation of $52 billion or more. Only 9.4% of Arm’s shares will be freely traded on the New York Stock Exchange, with SoftBank expected to own roughly 90.6% of the company’s outstanding shares after the completion of the IPO.
Arm’s listing is set to be the biggest technology IPO of the year. Investors are hoping that the listing could breathe new life into an IPO market that has been ‘slack’ since 2022.
250 billion chips globally
Arm says its energy-efficient processor designs and software platforms are integrated into more than 250 billion chips globally, into products ranging from sensors and smartphones to supercomputers.
The company estimates it enjoys approximately 48.9% share of the market for semiconductor design. Other players, such as Intel and AMD, have raced to catch up on designing their own chip architectures, but have struggled so far.
U.K. misses out… again
The U.K. government had originally hoped Arm would list on the London Stock Exchange, but the company instead dealt a major blow to Britain’s ambitions to become the leading global tech hub by opting for New York. The U.S. financial center has a deep institutional investor base and analysts who have a close understanding of the technology sector.
BIG interest
Chip design firm Arm said in a Tuesday filing that Apple, Google parent Alphabet, Nvidia and other technology companies are interested in buying up to $735 million in its shares as it seeks to go public on Nasdaq.
The investments might not happen, but the fact that these companies are considering them underlines the importance of Arm, whose designs are used for processors in data center servers, consumer devices and industrial products.
Arm chip – some 250 billion chips globally
Chip makers Intel, Samsung and TSMC are interested in investing alongside the three trillion-dollar technology companies, along with AMD and MediaTek, which make chip designs based on Arm architectures. Cadence Design Systems and Synopsys, which make electronic design automation software for processor development, have also expressed interest, according to a revised prospectus for Arm’s shares sale. This IPO could easily be the biggest of the 2023!
As part of the deal, Arm could wind up with a $52 billion market capitalization and almost $5 billion in new cash.
This is likely to be the biggest IPO of 2023
It is estimated that there will be about 19 billion devices using the Arm processor in the world by the end of 2023.
Arm target
The market share of Arm across different technology markets worldwide, which was 90% for mobile application processors, 34% for embedded computing, and 5% for data center and cloud in 2019.
Arm has a target of increasing its market share to more than 90%, 50%, and 25% respectively by 2028.
