Tech

Chip giants like Nvidia, Intel and Qualcomm are backing Microsoft and Apple in their battle over the future of AI

Ryan Shrout

Big tech companies are racing to put AI in your laptop, and here are the ones leading the way.

COMPUTEX, the annual June tech industry gathering in Taipei, Taiwan, hosted keynotes from the leading companies in consumer AI last week. The CEOs of Nvidia (NVDA), AMD (AMD), Qualcomm (QCOM) and Intel (INTC) drew large audiences. Nvidia's Jensen Huang needed an arena to accommodate the crowd. But they all shared their views on how the PC market will change dramatically over the next 12 months and the future of artificial intelligence on the PC. Here are the potential winners and losers:

AMD spent the majority of its keynote session from CEO Lisa Su talking about consumer products, unveiling two distinct product lines. The Ryzen 9000 series is poised to be the highest-performance desktop platform for gamers and creators looking to upgrade their workstations or PCs, helping AMD continue its push to gain market share over Intel in this small but influential business.

Meanwhile, the Ryzen AI 300 series parts are new chips built specifically for the AI PC laptop segment, combining a new CPU architecture, upgraded graphics design, and an NPU (Neural Processing Unit) capable of 50 TOPS (trillion operations per second). If AMD's claims from a performance perspective are correct, they could be the fastest new processors for AI PCs this year, but they may come at the expense of energy efficiency, which means shorter battery life and more heat. This is something Microsoft (MSFT) is asking its partners to improve in order to compete with Apple (AAPL) systems.

AMD is set to ship systems based on this new AI chip before Intel, meaning AMD has a chance to gain traction in the market.

Qualcomm

Qualcomm hasn't made any new announcements from a technology perspective since it unveiled its Snapdragon X-series AI PC chips at the Microsoft Surface event in May, but CEO Cristiano Amon highlighted the broad adoption and partnerships of the company's first truly competitive Windows platform. CEOs and executives from Dell Technologies (DELL), HP (HPQ), Lenovo Group (HK:992), ASUS (TW:2357), Acer (TW:2353) and Microsoft joined Amon on stage.

Retailers around the world are thirsty for reasons to encourage consumers to buy and upgrade their PCs.

Qualcomm appears ready to take on Intel and AMD in the retail and consumer space. It has partnered with the Windows team to develop campaigns and marketing that highlight the benefits and features of the new Copilot+ PC category that Microsoft launched last month. Qualcomm will be the only company that will have chips that are Copilot+ ready and compatible this summer and fall. It remains to be seen when AMD and Intel will be ready and able to support these industry-changing features through their operating systems.

Qualcomm CMO Don Maguire also cited partnerships with retailers like Best Buy (BBY), Costco (COST), and Amazon.com (AMZN) as a reason to believe the company's new platform will beat sales expectations. Retailers around the world are hungry for reasons to entice consumers to buy and upgrade PCs, and 2024 is shaping up to be a big year given Microsoft's push for AI PCs as the “new Windows.”

Intel

At a trade show in Taiwan, Intel unveiled detailed details of a new architecture called Lunar Lake, a significant architectural change from previous versions, combining all-new CPU cores with a 50% faster graphics system and an NPU that's four times faster than the currently shipping Core Ultra processor family. Intel hasn't shared more specific performance information on how Lunar Lake compares to solutions from AMD and Qualcomm, but that information is expected to emerge closer to launch.

This is a big question mark for Intel: when exactly will Lunar Lake hit the market? The company is targeting “late Q3” when it will be available for review and systems to buy. Discussions with system OEMs last week suggest this timeframe may be a bit aggressive, and every week that goes by without Intel having a strong competitor in the AI PC space means more revenue and momentum going to other chip makers.

The truth is, Microsoft and the market at large need Intel to succeed in the AI PC race. Qualcomm and AMD may be able to offer comparable or better chip solutions, but neither can scale to the volumes needed to satisfy the market over the long term, at least not yet. For now, Intel, the overwhelming market share leader, is the only way to get Windows and Copilot+ to a wide audience.

NVIDIA

For now, Nvidia has an entirely different perspective on AI PCs. Rather than offering combined CPU, GPU and NPU chips for thin and light form factor laptops like its competitors, Nvidia is putting the AI PC banner on its GPU brand, GeForce. Huang's keynote at the start of Computex week didn't say much about Nvidia's ambitions in the PC space, instead focusing on the data center market, although the company has held other conferences to talk about that too.

Nvidia's stance is clear: the company is the leader in AI computing, driving the most AI software development (including both the tools to create new AI applications and the AI apps themselves), and providing the best performance available for AI. This is a fact: GeForce GPUs offer orders of magnitude more computing power than NPUs in Qualcomm, Intel, and AMD chips. Nearly all software that uses AI creatively, whether it's text-to-image generation, audio and noise removal, or frame generation to improve your gaming experience, was first built to run on Nvidia's GeForce GPUs.

But discrete GPUs are expensive, not all PCs, desktops, and laptops have them, and they're not as power efficient as NPUs during AI processing, which can reduce battery life. Performance is a top concern for professionals and content creators who rely on AI for their work, so Nvidia will likely continue to have the advantage.

Winners and Losers

The biggest winner so far appears to be Qualcomm.

The biggest winner so far appears to be Qualcomm, whose latest Snapdragon processors will be sold exclusively for a limited time in what will be called Copilot+ PCs, giving Microsoft and retailers a one-way marketing and promotional role. Qualcomm will use the exclusivity to sell its chips, not only boosting revenue but creating a performance and features leadership story that will keep it relevant well into 2025 and beyond.

Intel may have the toughest road ahead as Lunar Lake products won't be available until later this year. Additionally, there are questions about when Microsoft will enable these new specific OS-level AI features on non-Snapdragon processors, which could further prolong Qualcomm's technological advantage. While Intel will no doubt benefit from this AI PC cycle, there are also questions about how big Lunar Lake will be and how it will impact system OEMs' processor choices over the next 12 months.

AMD's position is somewhere in the middle. Its new AI chips will be available sooner than Intel's, but the AI-specific features in Copilot+ won't arrive until the as-yet-undetermined future. It may offer the best performance solution for these laptops, but it could also be at the bottom when it comes to battery life. More testing is needed to determine this, but current signs are pointing in that direction.

The good news for system vendors like Dell, HP, and Lenovo is that they can benefit from all of this. Companies that can create designs using chips from all three vendors can target different geographies and channels, and offer at price points that maximize sales revenue and volume. Of course, there are some risks in relying too heavily on one chip vendor, but the interest and excitement in the AI PC space may minimize the potential drawbacks.

Ryan Shrout is President of Signal65 and founder of Shrout Research. Follow him at @ryanshrout. He has provided consulting services to AMD, Qualcomm, Intel, Arm Holdings, Micron Technology, and Nvidia, among others. Shrout holds shares in Intel.

Plus: Apple's WWDC is on Monday. Here are five things to expect as the spotlight shifts to AI.

What's more, “for Nvidia's valuation to be meaningful, AI has to be used in other areas,” said ARK's Cathie Wood.

-Ryan Shrout

This content was produced by MarketWatch, an operation of Dow Jones & Co. MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.

(End) Dow Jones Newswires

06-15-24 1255ET

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