Nvidia will invest $5 billion in Intel, becoming one of the company’s largest shareholders in a deal that could reshape the semiconductor industry and boost US efforts to reclaim leadership in chipmaking.
The investment, announced Thursday, will give Nvidia around a 4% stake in Intel once new shares are issued. It comes just weeks after the US government took a 10% holding in Intel, a move engineered by Washington to shore up the company’s finances and strategic role in the domestic tech sector.
Intel shares soared 30% in premarket trading on the news, while Nvidia stock gained more than 3%. Shares of rivals AMD and Taiwan’s TSMC slipped 4% and 2% respectively, highlighting the market impact of the partnership.
Nvidia said it would pay $23.28 per share, a premium to the $20.47 price at which the government acquired its stake but slightly below Intel’s most recent closing price of $24.90. “It’s a reflection of Nvidia looking to diversify within the US and gain some brownie points with the US government,” said Chris Beauchamp, chief market analyst at IG Group in London.
The pact will see Intel design custom central processors for data centres that will be paired with Nvidia’s market-leading AI chips, known as GPUs. A proprietary Nvidia interconnect will allow the chips to communicate at higher speeds, giving Intel the chance to generate revenue from every Nvidia AI server sold. For the consumer market, Nvidia will provide Intel with custom graphics chips to integrate with its PC processors.
Crucially, the deal does not involve Intel’s contract manufacturing arm, known as its foundry business, which many analysts believe must secure a large customer such as Nvidia, Apple, or Qualcomm if it is to remain viable.
The announcement marks a rare breakthrough for Intel, once Silicon Valley’s flagship company, which has struggled for years to reverse its decline. New chief executive Lip-Bu Tan, appointed in March, has promised to slim down operations and expand capacity only when demand is secure. The company has recently bolstered its balance sheet with $2 billion from SoftBank and $5.7 billion from the US government.
Intel’s chief financial officer David Zinsner said last month that the group was in a “good cash position” and would not need significant new funding until it expanded investment in its next-generation “14A” chipmaking process.
Nvidia CEO Jensen Huang called the collaboration “historic,” saying it would “lay the foundation for the next era of computing.” Industry analysts said the partnership could intensify competition with AMD and Broadcom, both of which are developing AI server technologies.
“Anything that Nvidia decides to endorse just by association will make that stock of Intel appear attractive because it implies that Nvidia sees value in Intel,” said Peter Andersen, founder of Andersen Capital Management.
While no timeline has been given for joint products, the two companies said they planned “multiple generations” of collaborative chips, signalling a long-term commitment to the partnership.
