Rivals Intel and AMD Team Up on PC Chips to Battle Nvidia

Intel Corp. and Advanced Micro Devices Inc., archrivals for decades, are teaming up to thwart a common competitor, Nvidia Corp.

Intel planned to announce Monday a laptop-computer chip that combines an Intel processor and an AMD graphics unit, according to a person familiar with the matter. The chip is intended for laptops that are thin and lightweight but powerful enough to run high-end videogames--attributes that lately have been driving sales in an otherwise waning market for personal computers.

It will be the competitors' first collaboration since the 1980s, said analyst Patrick Moorhead of Moor Insights & Strategy, and reflects complex shifting dynamics in the semiconductor industry.

For decades, Intel and AMD have scrapped for market share in PC chips. Intel has been dominant for much of that time, lately holding a nearly 100% share, according to Mercury Research. But AMD recently launched chips that represent the first real competition for Intel in that market for years.

AMD also recently revamped its graphics-chip designs, looking to take share away from Nvidia, which has nearly 80% of the market for stand-alone graphics chips by revenue.

Intel competes head-on with Nvidia in driving artificial-intelligence calculations for large internet companies. For several quarters, Nvidia's business selling chips to data centers has been up by triple digits from the previous year, presumably displacing sales of Intel processors. Intel last year acquired technology to compete for that business with the purchase of Nervana Systems, and it expects those chips to start shipping by the end of the year.

Gaming PCs typically require both Intel processors and high-end graphics chips from AMD or Nvidia. Intel's new product give it a shot at some of the revenue that usually goes to those graphics chips, while generating new sales for AMD and muscling in on Nvidia's dominance in graphics units.

"Strategically, Intel is more comfortable competing with AMD than Nvidia, " Mr. Moorhead said. "They feel like they know what to do to compete," so they can afford to cooperate to some degree.

An AMD spokesman said that laptops built on Intel's new chip won't compete directly with those based on AMD's coming Ryzen Mobile, another power-efficient chip that combines general-purpose processing and graphics. The Intel chip will appeal to serious gamers, he said. The AMD unit, which the company expects to ship by the end of the year, is capable of running games, but not specialized for that purpose.

"We're playing in a complementary market," the spokesman said. said.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

November 06, 2017 06:15 ET (11:15 GMT)