Nvidia (NASDAQ: NVDA) revealed its plans to invest $5 billion in Intel (NASDAQ: INTC) and launch a chip development partnership. The firm will purchase Intel common shares at $23.28 per share, a discount to Intel’s $24.90 Wednesday close but above the US government’s $20.47 per-share price for the nearly 10% equity stake it took last month.
After issuance, Nvidia is likely to own over 4% of Intel, placing it among its largest shareholders.
The companies’ pact centers on jointly developing multiple generations of PC and data-center products, pairing Intel-designed custom CPUs with Nvidia’s AI accelerators and linking them via proprietary Nvidia high-speed interconnects.
Those links are a key AI differentiator because many chips must be ganged together to process massive data sets. This arrangement gives Intel a path to participate economically in each Nvidia server sold with the combined package.
“This historic collaboration tightly couples Nvidia’s AI and accelerated computing stack with Intel’s CPUs and the vast x86 ecosystem–a fusion of two world-class platforms,” Nvidia CEO Jensen Huang said in a release. “Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
They did not disclose financial terms of the technical collaboration, nor a ship date for the first co-developed products, and emphasized that pre-deal product plans remain unchanged.
Crucially, the agreement does not include a foundry contract and Intel’s external manufacturing arm is not expected to fabricate Nvidia chips under this deal. Even then, the tie-up poses competitive pressure on Taiwan Semiconductor Manufacturing Co., which currently manufactures Nvidia’s flagship processors, and on Advanced Micro Devices and Broadcom, which compete in data-center compute and chip-to-chip connectivity.
On the PC side, Nvidia will provide a custom graphics chip that Intel can package with its x86 CPUs using the same high-speed links. For data centers, Intel will design custom CPUs to be co-packaged with Nvidia GPUs, using Nvidia’s proprietary interconnect to raise CPU-GPU throughput beyond prior offerings.
In recent weeks, Intel disclosed a $2 billion investment from SoftBank Group. CFO David Zinsner told investors at a Deutsche Bank event last month that Intel was in a “good cash position” and would not require much additional capital until it sees significant demand for 14A, its next-generation process expected to drive heavier investment.
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