Recently reports have emerged that the Biden administration has proposed a controversial plan to bolster Intel by merging its chip design division with AMD's corresponding departments. While both companies have established collaborative foundations, this speculation appears worrisome from both the market and technical perspectives.
A potential Intel-AMD merger would mark an unprecedented milestone in technology history. These companies have been virtually synonymous with PC processors, with AMD serving as Intel's primary competitor since its founding.
Their rivalry dominated the late 20th century, characterized by numerous patent disputes until both parties signed an agreement recognizing mutual rights to the x86 architecture. This agreement temporarily resolved a conflict that had impacted the entire semiconductor industry. However, the competition between AMD and Intel persisted in the CPU sector.
At Lenovo Tech World in October 2024, Intel CEO Pat Gelsinger and AMD CEO Lisa Su made an unprecedented joint appearance, announcing the formation of a collaborative advisory team focused on x86 ecosystem development and future challenges.
From a market perspective, while the companies remain competitors, they share common ground in the broader "ecosystem battle." Despite their intense rivalry, users consistently operate within the x86 ecosystem, with market dynamics shifting based on processor performance advantages.
However, user migration to the Arm ecosystem presents a more significant challenge, as returning customers prove notably difficult. This context makes the recent cooperation between AMD and Intel more comprehensible, particularly given the existing progress in their relationship.
Significantly, during the Ohio wafer fab groundbreaking ceremony in 2022, Gelsinger invited President Biden and urged American companies, including AMD, Nvidia, and Qualcomm, to partner with Intel Foundry for chip manufacturing. This demonstrates a marked improvement in Intel-AMD relations compared to a decade ago, especially as both companies now face competition from Arm.
Market implications of potential merger
AMD's Ryzen processors have achieved significant maturity, evolving through multiple generations to Zen 5, with performance now matching or exceeding Intel's offerings. Under the leadership of CTO Mark Papermaster and CEO Lisa Su, AMD has effectively eliminated previous technological gaps, reducing the strategic value of a potential merger.
For Intel, such a merger could prove counterproductive. Integrating its design division into AMD would sacrifice control over future processor development. Even with core team retention, the prospect of regaining market leadership would diminish significantly.
Leadership structure in a merged entity could trigger substantial conflicts regarding staffing decisions and product roadmap revisions. Moreover, the merger would not address the fundamental challenges facing Intel Foundry's rejuvenation.
Given their combined near-total dominance of the x86 ecosystem, a merger would face significant antitrust scrutiny, making regulatory approval from authorities in China, the United Kingdom, and France highly improbable.
These discussions ultimately highlight the administration's urgency to support Intel, with media coverage of the merger proposal emphasizing governmental commitment to addressing Intel's challenges.
