Nvidia, one of the world's leading chipmakers, has announced plans to invest $5 billion in Intel and work with struggling semiconductor companies on products.
A month after the Trump administration confirmed it had acquired a 10% stake in Intel, the latest extraordinary intervention by the Corporate America's White House – Nvidia said it would work with the company to work with the custom data centers that form the backbone of artificial intelligence (AI) infrastructure and personal computer products.
Intel shares skyrocketed 27% during early trading in New York. Nvidia rose more than 3%, strengthening its market value by $400 million.
Nvidia said it would spend $5 billion to buy Intel common stock at $23.28 per share. Investments are subject to regulatory approval.
“This historic collaboration marks the merging of two world-class platforms by accelerating the computing stack with Nvidia's AI and Intel's CPUs and the vast X86 ecosystem,” said Jensen Huang, CEO of Nvidia. “Together, we will expand our ecosystem and lay the foundations for the next age of computing.”
The companies said they will work to “connect the architecture seamlessly.”
For data centers, Intel creates custom chips that NVIDIA uses on its AI infrastructure platform. For PCS products, Intel builds chips that integrate NVIDIA technology.
This agreement provides Intel with a lifeline. This was a pioneer in Silicon Valley, where processors enjoyed decades of growth as they were powered by the personal computer boom, but it slumped after missing out on a shift into the era of mobile computing, which was unleashed by the iPhone's 2007 debut.
Intel has lagged even further in recent years amid the AI boom that has promoted Nvidia to become the world's most valuable company. Intel lost nearly $1.9 billion last year and another $3.7 billion in the first six months of last year, with the plan to cut its workforce by quarter by the end of 2025.
Meanwhile, Nvidia is rising sharply as its special chips support the artificial intelligence boom. Chips known as graphics processing units, or GPUs, are extremely effective in developing powerful AI systems.
Nvidia is the second company to invest billions of dollars in frail tip makers. In August, Japan's leading high-tech investment company Softbank announced it was investing $2 billion in Intel in exchange for a 2% stake in the company's business. Softbank's investment comes after the initial report was planned by the US government to invest in Intel's first surface. Intel's investments give Japanese companies a growing presence in the US.
Donald Trump is working to strengthen the US semiconductor industry, and previously threatened to impose 100% tariffs on imported chips. Trump also negotiated export deals with NVIDIA and its competitor AMD, allowing companies to sell low-capacity AI chips to China in exchange for a 15% reduction in sales of these chips.
Experts say Nvidia's latest investment in Intel will only examine the position of major chipmakers and could provide the boost they need to ultimately win Intel in the AI race.
“Wedbush's high-tech analyst Dan Ives said: [Nvidia’s] The world is waiting for more sovereignty and businesses to line up the world's most sophisticated tips, so everyone else is paying rent. ”
Reports that contributed to the Associated Press
