Nvidia dominates the artificial intelligence computing chips market, coming after Intel’s longtime stronghold of personal computers. The chip maker has quietly begun designing central processing units (CPUs) that would run Microsoft’s (MSFT.O) Windows operating system and use technology from Arm Holdings(O9Ty.F). This company has built processors for phones and tablets with more minor, longer battery life than traditional PC chips.
If successful, Nvidia could eventually sell PC chips as early as 2025. The company may join Advanced Micro Devices (AMD.O), which has been making PC chips based on Arm technology since 2016.
Switching computer programs from the x86 processor architecture that Intel and AMD share to an Arm-based design can be difficult, and software developers might need to adjust. But the transition would be easier if the CPUs ran Windows, designed to run on both x86 and Arm-based processors.
The move comes in response to a growing demand for AI chips in various applications, including smartphones, home robots, and self-driving cars. Nvidia also sees a growing market for its GPU processors, which can perform the same types of tasks handled by the CPUs in desktop and laptop computers.
Nvidia has already invested heavily in AI, and its stock has climbed as investors have realized the value of artificial intelligence. The stock was up 170% year over year in the fiscal third quarter, beating Wall Street expectations for revenue.
However, the company faces a few headwinds that may depress its growth. The most serious one is the rise of “edge computing,” where companies gather information locally and act upon it immediately instead of sending it to a data center hundreds or even thousands of miles away for processing. This approach can save money and reduce the time it takes to act on critical information, which can be expensive or dangerous if the delay is too long.
Nvidia’s acquisition of Arm gives it a significant advantage in this emerging area, and it will probably become the dominant player in the industry if successful. That is good for customers of both companies, but it isn’t necessarily a great deal for Intel. It will still be able to sell its Xeon processors for cloud computing and high-performance applications. Still, the company might lose out on essential opportunities in IoT devices and edge computing. The purchase also makes Nvidia a more prominent player in the emerging “mixed reality” market, where video is combined with 3D graphics. The company is establishing a research center in Cambridge, England, near Arm’s headquarters, and plans to build a state-of-the-art AI supercomputer that will attract top talent worldwide.
