Shares in NVIDIA Corporation surged nearly 8 percent today amid speculation that the graphics card company was about to be purchased by chip giant Intel. The stock rose $2.32 to hit $30.62 in afternoon trading on the NASDAQ exchange. An Intel spokeswoman declined to comment on the rumors, and there has been no statement from NVIDIA on the subject.
If the rumor is true, the announcement could come quickly. "There is speculation that Intel will make an acquisition announcement tonight," Bill Lefkowitz, an options strategist at vFinance Investments, told Reuters. However, not every analyst shares this belief. Some feel that NVIDIA's market cap of $10 billion would represent too high a price for Intel, which is currently on a cost-cutting spree.
The deal, if it happens, would mirror the purchase of rival graphics card maker ATI by chipmaker AMD. That acquisition represented a significantly lower cost outlay, as ATI's market capitalization was only $4.2 billion at the time. Still, AMD managed to swing the deal, a combination of cash and stock, while only having a market cap slightly more than double ATI's. Intel's valuation currently stands at an impressive $120 billion.
Intel currently manufactures integrated graphics chipsets, which are found in many Intel-based motherboards. However, it has not ventured into the world of discrete graphics cards, where NVIDIA and ATI have for years battled it out to see who can create the fastest-performing 3D accelerator card. If Intel were to pick up NVIDIA, it might eventually divide the computing world into two separate camps, offering what are essentially two different types of PCs. Whether or not the merger happens, there is a definite trend of consolidation among PC hardware companies. As in other maturing industries (such as passenger jet manufacturers) there may end up being one or two strong competitors that wind up surviving.