Nvidia announced on Thursday that it will invest $5 billion in Intel, giving a major boost to the struggling American chipmaker and making Nvidia one of its largest shareholders. The deal comes just weeks after the U.S. government took a 10 percent stake in Intel as part of an extraordinary rescue effort.
The investment gives Nvidia roughly 4 percent ownership in Intel and immediately lifted Intel’s stock by 23 percent. Shares of Nvidia also rose by 3.8 percent. Under the agreement, both companies will jointly develop chips for PCs and data centres. Intel’s foundry business will supply processors and advanced packaging for these products, but it will not manufacture Nvidia’s own chips.
Nvidia CEO Jensen Huang said the partnership was independent of government involvement, though he added the administration would have been supportive. Huang noted that Nvidia has been working with Intel for nearly a year and is evaluating Intel’s foundry technology for future use.
The pact gives Intel a much-needed lifeline after years of failed turnaround attempts. Its new CEO, Lip-Bu Tan, has vowed to streamline operations and build new capacity only when demand supports it. Industry experts say this partnership could reposition Intel in the fast-growing AI sector. “This is a massive game-changer for Intel and effectively resets its position of AI-laggard into a cog in future AI infrastructure,” said Gadjo Sevilla, a senior analyst.
The collaboration poses potential risks to rivals. Taiwan’s TSMC, which currently manufactures Nvidia’s flagship processors, may face long-term challenges if Nvidia shifts some of its chip production to Intel. AMD, which competes with Intel in supplying data centre chips, could also lose ground.
Analysts believe the deal may even pave the way for a future acquisition or restructuring of Intel. “This may be the first step of an acquisition or breakup of the company though it is entirely possible the company will remain a shadow of its former self but will survive,” said Nancy Tengler, CEO of an investment firm.
The companies confirmed that multiple generations of new products are planned, though no launch dates were provided. Intel will design custom central processors that can be paired with Nvidia’s AI-focused GPUs, linked by Nvidia’s proprietary technology to enable faster communication between chips.
The partnership adds to Intel’s growing pool of capital, following recent investments of $2 billion from SoftBank and $5.7 billion from the U.S. government.
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