Tech giant Nvidia invests in competitor Intel
Nvidia and Intel have announced a significant partnership aimed at expanding their ecosystems and laying the foundation for the next era of computing. According to Nvidia CEO Jensen Huang, the collaboration will focus on creating custom data center and PC products designed for AI applications.
The deal, which was announced on Thursday, will see Nvidia purchase Intel common stock at $23.28 per share, subject to regulatory approval. Intel CEO Lip-Bu Tan, who took over in March amid layoffs and market challenges, welcomed the investment.
The partnership does not involve Nvidia using Intel's struggling manufacturing business to build chips. Instead, it is focused on the development of cutting-edge AI technology. This comes as Nvidia has risen as the world's leading AI chip provider, with its graphics processing units (GPUs) becoming essential building blocks of artificial intelligence applications.
On the other hand, Intel missed the smartphone boom and failed to develop competitive hardware for the AI era, allowing Asian manufacturers TSMC and Samsung to dominate the custom semiconductor market.
The partnership is not influenced by the Trump administration, according to Nvidia CEO Jensen Huang. However, the Trump administration took a 10 percent equity stake in Intel last month, marking a rare instance of the US government taking shares in private companies.
Analyst Jack Gold stated that the deal should not be seen as "a bailout for Intel," with Nvidia also getting benefits, including the potential for customized Intel processors for its own needs. Dan Ives of Wedbush Securities stated that this investment brings Intel front and center into the AI game.
Besides Nvidia and Intel, companies involved in the collaboration for developing customized data center and PC products for AI applications include Elliptic Labs, Acronis, and NWN. These companies focus on advanced AI sensor technologies, cybersecurity solutions, and AI-powered digital learning platforms integrated with Intel’s Core Ultra processors and AI-PC ecosystems.
The investment in Intel is a significant commitment to Intel's turnaround efforts. Tan acknowledged the difficulty of Intel's turnaround, particularly as US-China trade tensions complicate the semiconductor landscape. Bringing manufacturing of high-tech products back to the United States has been a major priority of the Trump administration.
After the announcement, Intel's stock price rose by as much as 26 percent on Wall Street. The partnership is expected to further solidify Nvidia's position as the leading AI chip provider and provide Intel with the opportunity to regain its footing in the AI market.
