Microsoft will likely design more chips beyond the AI and cloud models, added Glenn O’Donnell, vice president and research director at Forrester. “This is only the beginning, as it will need more chips to serve other purposes in its cloud operations as well as processing AI at the edge and in PCs,” he said.
O’Donnell agreed that the announcement had little to do with Nvidia. The Intel deal is about manufacturing chips, and Nvidia isn’t a chip manufacturer, he noted. “This does not come at the expense of Nvidia,” he added. “They are different relationships.”
Microsoft will continue to use Nvidia GPUs in addition to its own chips, O’Donnell added. “Microsoft’s AI ambitions erode a bit of Nvidia’s dominance in powering AI, but Nvidia will remain the juggernaut in AI.”
Intel’s flurry of chip announcements this week represents a second attempt for the company to build a foundry ecosystem that supports external customers, Demler said. Intel had announced an internal foundry model, for both external customers and its internal product lines, in October 2022.
The company’s new efforts to work with Arm, Cadence Design Systems, and other companies is a “good sign” for future success, Demler added.
Intel has turned to making chips for external customers in an effort to rebuild its market share in a competitive industry dominated by TSMC and Samsung. Intel, once the world’s largest chipmaker, began losing market share in the late 2010s due to manufacturing missteps, competition from Arm, Nvidia and other chip designers, and declining PC sales.
