“What if?”
What if Benjamin Franklin didn’t experiment with Kite?
What if the US did not impose an oil embargo on Japan in August 1941?
What if President Dwight Eisenhower never sent military assistance to Vietnam in 1955?
Questions like this are associated with almost every major event in history.
The quarterbacking of armchairs has become American entertainment, from the second speculation of political facilities to questioning the decisions of the coaching staff of their favorite sports teams.
We do that all the time.
One simple change sticks to the way in which history can dramatically change courses.
And that’s exactly what happened 20 years ago. This is when the decision of the singular boardroom has forever changed the trajectory of one of the most important technological advances in human history.
Let me explain…
Radical ideas become flat
In 2005, CEOs of America’s biggest company had an idea.
At the time, Intel Inc. (NASDAQ: INTC) It was the dominant force in developing chips, the electronic brain of most computers.
Several Intel directors were looking at a small Silicon Valley upstart that is developing graphics processing chips that could create new jobs in the data center.
Intel CEO Paul Otellini liked the idea and Nvidia Corp. (NASDAQ: NVDA).
However, there was a problem with Intel’s board of directors.
The company has not had a good track record of absorbing other companies. Plus, the price tag (as much as $20 billion) was more than Intel had ever spent on acquisitions.
The board couldn’t handle this idea.
Oterini retreated the acquisition and died in the water.
As they say, the rest is history.
Despite its dominant market share, Intel has struggled to innovate and maintain its relevance amid the changing technological environment.
Meanwhile, Nvidia has skyrocketed from its $20 billion acquisition price to a total market capitalization of $3.4 A tragic. For those who maintain their score, they earn 16,900% tidy and tidy.
That brings us back to today’s fascinating question…
What happens if Intel actually purchased Nvidia in 2005?
The AI revolution may not have happened
As Adam Odell pointed out recentlyIntel has a history of struggling to innovate beyond its core vision.
Back in the 90s, Intel was a gem of the world of technology.
The company maintained its dominance in the market, but it never really innovated that in the past.
Here is an example:
In 2011, Intel spent $1.4 billion to purchase Infineon’s wireless solutions division and created the Intel Mobile Communications Division.
The department was intended to research and develop mobile technology.
The division created 2G, 3G, 4G and 5G internet modems, but these products did not dent market share.
2019, Apple Inc. (NASDAQ: aapl) We have signed a $1 billion agreement with Intel to purchase Intel Mobile Communications Division, and have ended Intel’s entry into the mobile market.
What happens if Intel buys Nvidia? We can guess some things:
- Intel has bought Nvidia for $20 billion and continues to create the same graphics chips for its data centers.
- Intel will not fully expand the development of these chips, and ventures will start to lose money as demand for those chip rolls.
- Knowing that it will never regain its initial $20 billion investment, Intel Board sells its graphics chips business to Qualcomm for less than its payment.
- The development of the chips required to calculate large-scale language models used in AI is 10-15 years behind.
Fast forward to Today and not two years from this incredible AI Mega trend after the launch of ChatGpt, Mass Market’s massive language model is still a few years away.
Imagine Intel killed the AI revolution 20 years ago. If it was making a purchase, Nvidia may not have completely innovated its AI graphics chips under Intel’s guidance.
Adam called for the decision not to buy Nvidia Intel’s “the only worst failure in the history of the company.”
That’s true, but we’ve kept the timeline of the AI revolution as is.
Until next time…
Secure trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Market
