Nvidia, the world’s largest chipmaker, announced Thursday that it will invest $5 billion in Intel and partner with the ailing semiconductor manufacturer.
According to a press statement from Nvidia, both companies will collaborate to develop unique data centers that serve as the foundation for computing devices and artificial intelligence systems.
Nvidia said that it will spend $5 billion to acquire Intel common shares at $23.28 per share. The transaction, which is subject to regulatory clearance, comes one month after the US government acquired a 10% stake in Intel.
This historic partnership intimately integrates NVIDIA’s AI and accelerated computing stack with Intel’s CPUs and the massive x86 ecosystem, creating a merger of two world-class platforms, according to Nvidia CEO Jensen Huang. Together, we will grow our ecosystems and create the groundwork for the next era of computing.
The two corporations stated that they will endeavor to “seamlessly connect” their architectures.
Intel will produce customized chips for data centers, which Nvidia would employ in its AI infrastructure platforms. However, Intel will produce processors that use Nvidia technologies for PC products.
The deal offers a lifeline to Silicon Valley pioneer Intel, which saw decades of expansion as its chips drove the surge in personal computers, but then went into decline after missing the transition to the mobile computing age brought about by the 2007 release of the iPhone.
The artificial intelligence explosion that has made Nvidia the most valuable business in the world has caused Intel to lag even further behind in recent years. After losing around $19 billion in the previous year and an additional $3.7 billion in the first half of this year, Intel plans to reduce its staff by 25% by the end of 2025.
Last month, the U.S. government entered to acquire a 10% stake, making it one of Intel’s biggest investors. Federal authorities said that their investment in Intel was meant to support domestic production and U.S. technology.
Daniel Ives, an analyst at Wedbush Securities, wrote in a client note that the deal is “bullish for U.S. tech.”
According to Ives, the deal is revolutionary for Intel since it puts them at the forefront of the AI space. After years of suffering and investor annoyance, Intel has had a successful few weeks due to the recent 10% stock ownership investment from the US government.
Meanwhile, Nvidia has had a meteoric rise as a result of the artificial intelligence growth being supported by its specialized chips. Known as graphics processing units, or GPUs, the processors are very good at creating robust artificial intelligence systems.
The two chipmakers’ agreement coincides with China’s efforts to reduce its reliance on American semiconductor technology. According to reports, Chinese authorities prohibited a number of major domestic tech firms from acquiring Nvidia processors this week, and Huawei declared that it was growing its AI chip development and production.
While Nvidia and Intel will collaborate to create new chips, no manufacturing agreement has been reached between the two. Nvidia’s possible access to Intel’s chip foundries poses a concern to Taiwan Semiconductor Manufacturing Company, which presently builds the tech giant’s flagship processors.
