NVIDIA Plans to Invest $5 Billion in Intel for Collaborative Development of Data Center and PC Hardware
In a significant move aimed at bolstering their positions in the artificial intelligence (AI) market, Intel and Nvidia have announced a strategic investment collaboration worth $5 billion.
The Silicon Valley pioneer, Intel, has been struggling to keep pace in the AI boom and has reported losses of nearly $19 billion last year and another $3.7 billion in the first six months of this year. This collaboration is expected to place Intel "front and center into the AI game."
Under the terms of the agreement, Intel will build chips that integrate Nvidia technology for PC products. Additionally, Intel will create custom chips for Nvidia's AI infrastructure platforms. The collaboration will also focus on the development of custom data centers for AI infrastructure and PC products.
For its part, Nvidia will invest $5 billion to buy Intel common stock at $23.28 a share. This investment makes Nvidia one of Intel's largest shareholders, giving it roughly 4% of the company after new shares are issued.
The deal is subject to regulatory approvals and is part of a broader initiative by the U.S. government to invest in domestic technology and manufacturing. The U.S. government has invested significantly in Intel to strengthen U.S. technology and boost domestic chip production.
Meanwhile, Nvidia has been facing challenges in selling its H20 chips in China due to demands from Washington and Beijing. Chinese officials have reportedly prohibited several large domestic technology companies from purchasing Nvidia chips. However, the collaboration between Intel and Nvidia does not appear to offer a solution to Nvidia's issues in China but carries political upside in the U.S.
The potential access to Intel's chip foundries by Nvidia poses a risk to Taiwan Semiconductor Manufacturing Company (TSMC), which is a major supplier of chips to Nvidia.
The collaboration between Intel and Nvidia is not the only significant development in the semiconductor industry. Huawei has announced its expansion of AI chip development and manufacturing. Other companies, including Micron Technology, AMD, and those that registered under the White House-engineered deal, are also expanding their efforts in chip production and AI education investments.
Analysts view the deal as a game-changer for Intel. Wedbush Securities analyst Daniel Ives considers the arrangement to be a significant step forward for Intel, which has been struggling to compete in the AI market.
The collaboration between Intel and Nvidia is expected to lay the foundation for the next era of computing, expanding the companies' ecosystems and creating opportunities for innovation and growth. The deal between the two tech giants was also highlighted during Nvidia CEO Jensen Huang's meeting with President Trump during his state visit to the United Kingdom.
