“what if?”
What if Benjamin Franklin never used a kite?
What if the United States never earned oil on Japan in August 1941?
What if President Dwight Eisenhower never sent military support to Vietnam in 1955?
Such questions may be related to every major event in history.
Armchair Quarterbacking has become an American pastime to question the decisions of the coaching staff of our favorite sports team, from the second estimate of the political establishment.
We do it all the time.
We decide on how a simple change can change the course of history significantly.
And it is fine what happened 20 years ago, when the decision of a unique board room changed the trajectory of one of the most important technological progress in human history forever.
Let me explain…
A radical idea gets flat
In 2005, the CEO of one of the largest companies in the US had an idea.
At that time, Intel Inc. (Nasdaq: commission)) The major force in developing chips was the electronic minds of most computers.
Some Intel directors had their eyes on a small Silicon Valley upstart, developing graphics processing chips that could potentially create new jobs in data centers, large -scale features that now power to Artificial Intelligence (AI) mega trends.
Intel CEO Paul Otelini liked this idea and NVDAQ (NASDAQ: NVDA,
However, Intel had issues on the board.
The company did not have a good track record of absorbing other companies. In addition, the price tag – as much as $ 20 billion – was higher than the Intel, was ever spent on an acquisition … walk alone on an upstart company with an track record.
The board rejected the idea by hand.
Otelini stopped the acquisition, killing him in water.
The rest, as they say, is history.
Despite its major market share, Intel has struggled to innovate and maintain relevance among the changing technical scenario.
Meanwhile, NVIDIA has increased from the purchase price of $ 20 billion to a total market capitalization of $ 3.4. Trillion. A streamlined 16,900% profit for anyone with score.
Which leads us to today’s attractive question…
What if Intel actually bought Nvidia in 2005?
AI revolution would not have happened
As Adam O’Del told recentlyIntel has a history of struggling to innovate beyond her main point of view.
In the 90s, Intel Tech was the gem of the world.
The company maintained its dominance in the market but never did it really.
Here is an example:
In 2011, Intel spent $ 1.4 billion to purchase Infineon’s wireless solutions division to create Intel Mobile Communications Division.
The purpose of the division was to do research and development on mobile technology.
While the division created 2G, 3G, 4G and 5G internet modem, those products never staked the market.
In 2019, Apple Inc. (Nasdaq: Aapl) Intel entered the $ 1 billion agreement with Intel to buy the Mobile Communications Division, thus ending Intel’s mobile market.
What if Intel had bought Nvidia? We can reduce some things:
- Intel purchases NVidia for $ 20 billion and continues to create similar graphics chips for data centers.
- Intel never expands the development of those chips, and the enterprise begins to lose money as the demand for those chips stalls.
- The Intel Board discovers that it will never invest its initial $ 20 billion and sells its graphic chips business for less than payment to Qualcomm.
- The development of chips required to calculate the large language models used in AI delays 10 to 15 years.
Rapid forward for today, and after the launch of the chatgipt, rather than two years in this incredible AI mega trend, large -scale market big language models are still away from years – as well as with every investment opportunity they have presented since 2022.
Imagine whether Intel killed the AI revolution 20 years before the start. If it had gone through the purchase, Nvidia may never have completely newed its AI graphic chips under Intel’s guidance.
Adam decided not to buy Nvidia Intel’s “worst blunder in the company’s history”.
This is true, but it also retained the AI Revolution Timeline.
By next time…
Secure business,
Matt Clarke, CMSA®
Chief Research Analyst, Money and Markets