The changing pecking order in semiconductors

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Subscribe to enjoy similar stories. NEW DELHI : Last week, Nvidia Corp., the world's largest artificial intelligence (AI) chipmaker, replaced Intel Corp., best known for computer processors, in the 30-share American benchmark share index. This movement in the Dow Jones Industrial Average reflects the big changes in the industry over the past few years, as AI took centre stage and the fortunes of top players reversed.

Nvidia's market value jumped from about $81 billion at the end of 2018 to $3.6 trillion now, making it the world’s most-valued company, ahead of Apple Inc., Microsoft Corp. and Google Llc. Intel’s dropped from $212 billion to $113 billion.

In the last four fiscal years, Nvidia's revenues jumped 265%, driven by demand for its graphics processing units (GPUs) used in AI applications, particularly large language models (LLMs) that dominate AI. Meanwhile, Intel's revenues shrank 30% during the period as Advanced Micro Devices, Inc., or AMD, ate away its dominance in the personal computer market. Intel's decline was also due to other strategic mistakes, including turning down an opportunity to own 15% of OpenAI.

The once dominant firm now faces the question of whether it can regain its footing alone or become a part of Qualcomm Inc., which has approached it for a potential buyout. Nvidia's surge and Intel's decline have also impacted the broader supply chain. Unlike Intel, which is an integrated device manufacturer and handles all aspects of semiconductor production, Nvidia outsources manufacturing, benefiting foundries like Taiwan Semiconductor Manufacturing Co.