Nvidia has agreed to invest $5bn in its struggling rival Intel to develop new chips for PCs and data centres. The deal which unites two of Silicon Valley’s longest-running competitors comes a month after the US government agreed to take a 10% stake in Intel.
Intel, which has struggled to gain a foothold in the booming AI server market, lost its crown as the world’s most valuable chipmaker to Nvidia in 2020 and has since struggled to keep up with its rival.
Nvidia’s chief executive, Jensen Huang hailed the deal as a “historic collaboration” and “a fusion of two world-class platforms”, combining its graphics processing units, which dominate the market for AI infrastructure, with Intel’s general-purpose chips. “Together, we will expand our ecosystems and lay the foundation for the next era of computing,” Huang said.
Deal Details
Under the terms of the agreement, Nvidia will buy $5bn worth of Intel stock at $23.28 per share. Following the announcement, Intel’s shares rose to $31.97 in pre-market trading, their highest level since July last year, while Nvidia’s shares rose 3%
Under the new agreement, Intel will build custom central processing units for Nvidia to build into its AI platforms for data centres, as well as a separate project to develop PC chips.
“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 and grow our business,” said Lip-Bu Tan, Intel chief executive.
Intel has struggled to secure external customers for its manufacturing operations and its chipmaking business is losing billions of dollars so the injection of cash by Nvidia would come in handy.
