Analysts scoff at talk of Intel-Nvidia deal

Computerworld - While rumors are swirling around the Internet that Intel is looking to buy rival chips maker Nvidia, analysts say it's nothing but talk and bluster.

Tech columnist Robert X. Cringely stirred up quite a bit of talk earlier this week when he posted a blog saying that Intel dropped plans last week to launch its long-anticipated graphics processor Larrabee because the upcoming chip was a stumbling block to Intel's secretive plans to buy Nvidia, which leads the GPU market. Since launching Larrabee would have moved Intel into the GPU (graphics processing units) market and upped the chip maker's competition against Nvidia, it had to scrap the graphics chip to save a potential deal.

"There is a funky dance going on right now between chip giants Intel and Nvidia and I just want to cut through the crap and tell you that no matter what the companies are saying, it is likely to end with Nvidia being purchased by Intel," Cringely wrote on Tuesday. "Both parties know it and the only thing that hasn't been determined yet is the price, which is what all this posturing is about."

Both Intel and Nvidia said they would not comment on rumors.

Analysts, however, were quick to comment, and nearly all of them said that although Intel was looking at possibly buying Nvidia a year ago, there's very little chance that it would ever happen.

Several issues stand in the way of such a major acquisition. First, the U.S. government and the European Union might have antitrust reservations about a purchase of this magnitude. Secondly, it's well known that, with legal and openly verbal clashes between the two companies, there is little love lost, and it would take impressive negotiations to reach an agreement that would satisfy both companies.

"There are some cultural concerns. They are fairly antagonistic to each other. Getting everyone under one roof would be a challenge," said Dean McCarron, principal analyst at Mercury Research.

Several analysts noted that both companies are so big that combining them would be prohibitive.

"No, this wouldn't happen," said Rob Enderle, an analyst with the Enderle Group. "Nividia is too large and the execs hate Intel. And Intel doesn't have the merger competency to do a big one and the culture conflicts would critically damage both firms... Though that would be the best Christmas present that AMD could imagine - critically damage both of those companies."

While most industry watchers don't see the rumor as having any real legs, Dan Olds, an analyst with The Gabriel Consulting Group, said that if the acquisition went through and the dust settled, Intel would be an even greater force to reckon with.