Key points
- Nvidia invests $5 billion in Intel, becoming a major shareholder. The partnership focuses on the joint development of PC and data center chips.
- This collaboration could challenge AMD and Broadcom in the AI market.
- The deal does not include Intel’s foundry services for Nvidia chip manufacturing.
- Intel’s stock surges significantly following the announcement.
Nvidia, the leading artificial intelligence (AI) chipmaker, announced a $5 billion investment in Intel, marking a significant strategic partnership between two tech giants. This investment will see Nvidia acquire Intel’s common stock at $23.28 per share, slightly below Intel’s closing price on Wednesday but exceeding the recent price set by the US government.
The move positions Nvidia as one of Intel’s largest shareholders, potentially owning 4% or more of the company. This substantial investment comes as Intel navigates a period of restructuring and renewed focus under its new CEO, Lip-Bu Tan.
The core of the partnership revolves around the joint development of chips for both PC and data center applications. Intel will design custom data center central processing units (CPUs) that will be integrated with Nvidia’s AI-accelerated graphics processing units (GPUs).
A key aspect is the utilization of Nvidia’s high-speed inter-chip communication technology, enhancing performance in AI applications. This collaboration gives Intel a significant advantage in the rapidly expanding AI market, enabling it to compete more effectively with rivals such as AMD and Broadcom.
Crucially, the agreement excludes Intel’s foundry business, meaning Nvidia will not utilize Intel for manufacturing its chips. This decision leaves Intel’s foundry future uncertain, as securing major clients like Nvidia is vital for its long-term success.
Despite this omission, the investment significantly bolsters Intel’s financial position, adding to recent investments from SoftBank and the US government. Intel’s CFO has indicated the company is financially secure and does not require substantial additional capital in the near term.
The combined Nvidia-Intel chips have the potential to disrupt the AI server market, offering a powerful alternative to AMD’s offerings. In the consumer market, the partnership will also lead to the creation of new PC processors incorporating Nvidia’s graphics capabilities, putting pressure on competitors such as AMD.
Both companies expressed optimism about the long-term potential of this collaboration, highlighting its impact on the future of computing. While specific product launch dates remain undisclosed, the partnership signals a significant shift in the competitive landscape of the chip industry.
