Dylan Patel on the AI Chip Race - NVIDIA, Intel & the US Government

**Dylan Patel** (0:00)
How you buy GPUs is like buying cocaine. You call up a couple of people, you text a couple of people, you ask, how much you got, what's the price?

**Guido Appenzeller** (0:07)
If your two arch nemesis suddenly team up, it's the worst possible news you can have. I did not see this coming. I think it's an amazing development.

**Sarah Wang** (0:14)
Like a Warren Buffett coming into a stock. Jensen is like the Buffett effect for the semiconductor world.

**Dylan Patel** (0:20)
It's poetic that everything's gone full circle and Intel's sort of crawling to Nvidia.

**Erik Torenberg** (0:27)
Today, we're talking about one of the biggest surprises in semiconductors in years. Nvidia just put 5 billion into Intel. Two long-term rivals now teaming up on custom data centers and PC products, a deal nobody saw coming. For Nvidia, it's the Buffett effect. For Intel, it's a lifeline. And for AMD, ARM and the global chip race, the fallout could be massive. To break it all down, I'm joined by Dylan Patel, Chief Analyst at SemiAnalysis, Sarah Wang, General Partner at a16z, and Guido Appenzeller, Partner at a16z, and former CTO of Intel's Data Center and AI Business Unit. Let's get into it. Dylan, welcome back to the podcast.

**Dylan Patel** (1:10)
Thanks for having me, yeah.

**Erik Torenberg** (1:12)
It just so happens that there's some big news, just as we're having you, Nvidia, announcing $5 billion investment in Intel and them teaming up to join the developed custom data centers and busy products. What do you think about the collaboration?

**Dylan Patel** (1:24)
I think it's hilarious that Nvidia could invest, it gets announced, and their investment is already up 30 percent. $5 billion investment, $2 billion profit already. I think it's fun because they need their customers to really have big buy-in. So when their potential customers buy-in and commit to certain types of products, it makes a lot of sense, right? And it's kind of funny in a way because in the past, there was this whole thing around how Intel was sued for being anti-competitive with their chipsets, and Nvidia actually got a settlement from Intel, right? Way back when, when the graphics were separate from the GPU, and the graphics were really put on the chipset, which had like all this other IO., like USB and all this stuff.
So, so it's kind of a funny like turn of events that now Intel is going to make like a chiplet and package it alongside a chiplet from, from Nvidia, and then that's like a PC product, right? So, you know, it's kind of poetic that everything's gone full circle, and Intel's sort of crawling to Nvidia. But actually, it might just be the best like device, right? I don't want an ARM laptop because it can't do a lot of things. And so, an x86 laptop with Nvidia graphics, fully integrated, would be probably the best product in the market.

**Erik Torenberg** (2:50)
Sir, are you optimistic? How do you think this will go?

**Dylan Patel** (2:52)
I mean, sure, I mean, I hope, I hope, right? I'm a perpetual optimist on Intel because I have to be. I was thinking that the structure of the deal that at least like a lot of the government folks and Intel were sort of trying to go for was people get big customers and the biggest suppliers directly give capital to Intel. But this is sort of the other way around where they're buying some of the stock, having some ownership, but they're not really like diluting the other shareholders. And then the other shareholders will get diluted slash everyone will get diluted when Intel finally does raise the capital from the capital markets. But because they've announced these deals and they're pretty small, right? Like 5 billion Nvidia, 2 billion SoftBank, US government was 10 These are still relatively small.

**Guido Appenzeller** (3:39)
Pretty small, yeah.

**Dylan Patel** (3:40)
Yeah, on the nature of things, right? Last time I think I said Intel needs like $50 billion, right? Now when they go to the capital markets, it's better. And hopefully, they get another couple of these announcements. Maybe there's all sorts of speculation that Trump is involved in sort of getting these companies to invest.
Nvidia, and now the government as well, of course, and now is Apple going to come invest, right? And also do something with Intel or who else will come in? And that will really boost investor confidence and they can dilute slash go get debt.

**Sarah Wang** (4:16)
Like a Warren Buffett coming into a stock. The Jensen is like the Buffett effect for the semiconductor world. Guido, you were the CTO of the Intel Data Center and AIBU. What are your thoughts?