Nvidia agreed to invest $5 billion in Intel Corp. and collaborate on developing chips for personal computers and data centres, a surprise partnership that pairs two longtime rivals as Intel struggles to regain footing in the semiconductor industry.
Shares of Intel surged 24% in premarket trading, while Nvidia stock was up over 2%.
The CEOs of NVIDIA and Intel will conduct a webcast press conference at 10 a.m. Pacific time (1 p.m. Eastern time) today to discuss the major announcement.
Details of the Nvidia and Intel deal
Nvidia will acquire Intel shares at $23.28 apiece, representing a 6.5% discount to Wednesday’s closing price, the companies said Thursday.
Intel will incorporate Nvidia’s graphics technology into its upcoming PC processors, while also supplying CPUs for Nvidia’s data centre products.
The companies did not specify a timeline for when the first jointly developed chips will reach the market and emphasised that the tie-up will not alter their individual strategic plans.
“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,” Nvidia Chief Executive Officer Jensen Huang said in a statement.
“Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
Lifeline for Intel?
The move follows a series of lifelines for Intel, which is contending with market share losses and the high costs of next-generation semiconductor development.
In August, the US government agreed to take a 10% stake in the company, while Japan’s SoftBank Group invested $2 billion last month. Intel has also been raising funds through asset sales.
Intel CEO Lip-Bu Tan welcomed the partnership, saying:
“We appreciate the confidence Jensen and the Nvidia team have placed in us with their investment and look forward to the work ahead as we innovate for customers. Intel’s x86 architecture has been foundational to modern computing for decades – and we are innovating across our portfolio to enable the workloads of the future.”
For Intel, the deal delivers both capital and cutting-edge technology to better compete against Advanced Micro Devices Inc., which has been eroding its share of the PC and server markets.
Intel’s future PC chips will combine its processors with Nvidia’s graphics units, strengthening its ability to counter AMD in laptops and desktops.
In data centers, where Nvidia’s AI accelerators dominate and have relegated Intel to a diminished role, Intel will provide CPUs for integration into Nvidia’s hardware clusters.
These processors handle general computing tasks alongside Nvidia’s specialised graphics chips.
Nvidia continues to consider outsourcing some chip production to Intel, but has no immediate plans to do so.
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