Key Points
- Nvidia announced a landmark $5 billion investment in its longtime rival, Intel, by purchasing common stock at $23.28 per share.
- The deal includes a deep technology partnership to co-develop custom chips for AI data centers and personal computers.
- Intel’s stock surged over 25% following the news, its biggest single-day gain in decades, while Nvidia’s stock also rose.
- The collaboration will see Intel build custom CPUs for Nvidia’s AI platforms and integrate Nvidia’s GPU chiplets into its PC processors.
- The move is seen as a major lifeline for the struggling Intel and a strategic alliance aimed at competing with common rival AMD.
New Delhi: In a stunning move that reshapes the semiconductor landscape, AI-leader Nvidia announced on Thursday a $5 billion strategic investment in its struggling rival, Intel. The deal, which sent Intel’s stock soaring, is more than a financial lifeline; it marks a historic technology partnership to create the next generation of chips for artificial intelligence and personal computing.
The market reacted immediately to the news, which followed nearly a year of private talks between the two CEOs. Intel’s shares skyrocketed by as much as 30% in pre-market trading and closed up about 23-25%, while Nvidia saw its own shares gain around 3%.
A Fusion of Two Tech Giants
The collaboration will tightly integrate the strengths of both companies. According to the announcement, the partnership will focus on two key areas :
- AI Data Centers: Intel will design and manufacture custom x86 CPUs for Nvidia, which will be integrated into Nvidia’s large-scale AI infrastructure platforms like its NVLink rack systems. This makes Nvidia a major customer of Intel’s processors.
- Personal Computing: Intel will build a new class of system-on-chips (SoCs) for PCs and laptops that integrate high-performance GPU chiplets based on Nvidia’s RTX technology.
“This historic collaboration tightly couples NVIDIA’s AI and accelerated computing stack with Intel’s CPUs and the vast x86 ecosystem a fusion of two world-class platforms,” said Nvidia founder and CEO Jensen Huang. “Together, we will expand our ecosystems and lay the foundation for the next era of computing”.
Lifeline for an Ailing Pioneer
This partnership marks a dramatic reversal of fortunes for the two Silicon Valley neighbors. Intel, once the undisputed king of the PC processor market, has fallen behind in the mobile and AI eras, struggling with manufacturing delays and market share losses. In contrast, Nvidia’s dominance in GPUs has made it the world’s most valuable company, with a market cap exceeding $4.25 trillion compared to Intel’s $143 billion.
The $5 billion investment from its ascendant rival is the latest in a series of crucial financial boosts for Intel. It follows a recent and unusual deal for the U.S. government to take a 10% stake in the company, as well as a $2 billion investment from Japan’s SoftBank. Analysts see the Nvidia deal as a powerful endorsement of Intel’s turnaround strategy. “Having Jensen’s blessing is priceless,” wrote one analyst.
