Could Nvidia soon rely on Intel for gaming chips? Here’s what we know

Intel Corp (NASDAQ: INTC) is in focus this morning following an analyst’s report that said Nvidia Corp (NASDAQ: NVDA) could soon become a customer of the semiconductor behemoth.

The multinational has recently hired Lip Bu-Tan, the former head of Cadence Design Systems, as its chief executive, tasked with reinvigorating growth at the chipmaker.

And the way he expects to accomplish that may be by onboarding Nvidia as a customer, according to UBS analyst Timothy Arcuri.

Intel stock is currently up some 15% versus its year-to-date low.

Nvidia could switch to Intel for gaming chips

Intel is currently working on a lower-powered 18AP node, which may prove attractive for Nvidia, particularly for gaming applications, the UBS analyst told clients in a research note today.

Nvidia has long been in collaboration with TSMC for chip manufacturing, but the Taiwanese giant is reportedly struggling with meeting an ever-so strong demand for gaming and artificial intelligence products.

Therefore, switching reliance to Intel for gaming chips and keeping TSMC as a dedicated partner for AI chips could help Nvidia benefit from better supply efficiency and minimise the risk of losing customers to AMD.

Nvidia shares are down another 5.0% on Monday as the macro uncertainty continues to weigh on the US tech stocks at large.

How Nvidia and INTC may benefit from a collaboration

Nvidia could benefit from other strategic advantages if it indeed chose to shift from TSMC to Intel as a foundry partner.

For starters, the US-based foundries of INTC could help Nvidia in terms of mitigating risks tied with geopolitical tensions or tariffs on imports from other regions.

The move, if it materialises, would be in line with NVDA’s broader strategy to bring manufacturing closer to home as well.

On the other hand, such a strategic alliance could set up another significant source of revenue for Intel.

Plus, a vote of confidence from the sector darling itself (Nvidia) could see others follow suit as well, driving more business to INTC.

Should you invest in Intel stock today?

Despite continued challenges, Street remains bullish on INTC shares, particularly after it appointed industry veteran Lip-Bu Tan as its chief executive.

While the consensus rating on Intel currently sits at “hold” only, analysts see upside in the semiconductor stock to over $25 on average that indicates potential upside of more than 10% from current levels.

Experts are positive on Intel stock also because it topped expectations on both the top and the bottom lines in its latest reported quarter.

At the time, the company told investors that it was “taking actions to enhance our competitive position and create shareholder value.”

INTC shares may be worth owning at current levels also because they pay a dividend yield of 2.2% at writing, which makes them even more exciting as an investment for 2025.  

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