Nvidia Surges on Intel Buy-Out Rumors

Markets are awash with rumors chipmaker Intel is getting set to acquire graphics developer Nvidia...but does it make any sense?

Technology markets are rife with speculation that chipmaking giant Intel is preparing to acquire graphics developer Nvidia, sending shares of the latter company soaring in trading on the NASDAQ exchange. Speculation puts any announcement after the close of markets today, but neither company has confirmed ay discussions regarding an acquisition.

If a deal is reached, it would follow just a few months after Intel rival AMD purchased graphic maker ATI in a deal worth roughly $5.4 billion. Although Intel has been tightening its belt as it faces stiff price competition with AMD, Intel has more than enough market capitalization (in the neighborhood of $120 billion) to leverage a takeover of Nvidia—although Nvidia’s expected asking price is rumored to be roughly three times that of ATI.

In some ways, acquiring a major graphics developer like Nvidia would complement Intel’s product lines, since the chipmaker has never marketed discrete graphics systems, and would enable the company to propel the development of its integrated graphics systems (long in use on many Intel-based motherboards) in ways sure to give the new AMD/ATI juggernaut a run for their money. On the other hand, Intel’s integrated graphics solutions already hold a dominant position in the PC graphics market, so business logic of paying a hefty premium to acquire a high-end graphics developer isn’t very clear.

And, of course, in the way of many industry rumors, it may all amount to nothing.