Nvidia is investing $5 billion in Intel as part of a landmark collaboration between the two global chipmaking giants.
Nvidia has confirmed it will invest a $5 billion stake in Intel while also partnering with the fellow US chipmaker to jointly develop future chips. The groundbreaking deal, announced on Thursday, represents one of the most ambitious collaborations ever seen within the semiconductor sector.
After new shares are issued to complete the deal, Nvidia will become one of Intel’s largest and most significant private shareholders. Shortly after the news reached investors, shares of Intel jumped 32% in premarket trading, while Nvidia stock was up more than 3%.
The partnership covers custom processors for data centres and PCs, combining Nvidia’s graphics chips with Intel’s CPUs to create faster, more powerful systems. Nvidia’s NVLink technology will provide high-speed connections between the chips, a major selling point for artificial intelligence (AI) workloads and advanced computing platforms.
How much has Nvidia paid for its Intel stake?
It has been revealed that Nvidia will pay $23.28 per Intel share, which falls slightly below the previous day’s close, with the deal valued at $5 billion. This price is 12.8% higher than the US government’s $20.47 per share purchase when it secured a 10% stake last month.
After new shares are issued to complete the deal, Nvidia will become one of Intel’s largest shareholders, with it set to hold an approximate 4% stake in the company. It comes shortly after Intel secured a major $2 billion inflow from SoftBank, along with the US government’s $5.7 billion investment.
What have the Nvidia and Intel CEOs said?
In a company statement, Nvidia founder and CEO Jensen Huang described how AI is “powering a new industrial revolution and reinventing every layer of the computing stack.” He added that Nvidia’s CUDA architecture sits at the heart of this reinvention, from silicon to systems and software.
“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,” he said. “Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
Meanwhile, Lip-Bu Tan, CEO of Intel, also expressed his excitement at the landmark deal. In paying tribute to the “confidence Jensen and the Nvidia team has placed in us with their investment”, he added how he looks forward to future innovation and business growth.
“Intel’s leading data center and client computing platforms, combined with our process technology, manufacturing and advanced packaging capabilities, will complement Nvidia’s AI and accelerated computing leadership to enable new breakthroughs for the industry,” he said.
How will the Nvidia and Intel collaboration work?
Nvidia’s industry-leading chips are currently driving the global AI boom. Therefore, this partnership will help to expand its footprint into servers that also rely on Intel processors. The companies plan to produce multiple generations of products, but a timetable for the first releases have yet to be confirmed.
In terms of data centres, Intel will design central processors that connect directly with Nvidia’s GPUs, boosting speed and efficiency in AI workloads requiring linked chip performance. As for consumers, Intel will package Nvidia graphics with its PC processors, potentially regaining lost ground against AMD in desktop and laptop markets.
However, the collaboration excludes Intel’s contract manufacturing, known in the industry as foundry work, which remains a critical challenge for the company’s long-term survival. Analysts say Intel must eventually secure a major foundry customer such as Nvidia, Apple, Qualcomm or Broadcom in order to remain competitive.
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