Nvidia, the world’s leading chipmaker, announced plans to invest $5bn in Intel and collaborate with the struggling semiconductor company on products.
One month after the Trump administration confirmed it had taken a 10% stake in Intel – the latest extraordinary intervention by the White House in corporate America – Nvidia said it would team up with the firm to work on custom data centers that form the backbone of artificial intelligence (AI) infrastructure, as well as personal computer products.
Shares in Intel surged 29% during pre-market trading in New York. Nvidia rose almost 3%, bolstering its $4tn market value.
Nvidia said it will spend $5bn to buy Intel common stock at $23.28 a share. The investment is subject to regulatory approvals.
“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. “Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
The two companies said they will work on “seamlessly connecting” their architectures.
For data centers, Intel will make custom chips that Nvidia will use in its AI infrastructure platforms. while for PCs products, Intel will build chips that integrate Nvidia technology.
The agreement provides a lifeline for Intel, which was a Silicon Valley pioneer that enjoyed decades of growth as its processors powered the personal computer boom, but fell into a slump after missing the shift to the mobile computing era unleashed by the iPhone’s 2007 debut.
Intel fell even farther behind in recent years amid the AI boom that’s propelled Nvidia into the world’s most valuable company. Intel lost nearly $19bn last year and another $3.7bn in the first six months of this year, and expects to slash its workforce by a quarter by the end of 2025.
Nvidia, meanwhile, has soared because its specialized chips are underpinning the artificial intelligence boom. The chips, known as graphics processing units, or GPUs, are highly effective at developing powerful AI systems.
Dan Ives, tech analyst at Wedbush, said: “With AI infrastructure investments continuing to grow with the company expecting between $3tn to $4tn in total AI infrastructure spend by the end of the decade, the chip landscape remains [Nvidia’s] world, with everybody else paying rent, as more sovereigns and enterprises wait in line for the most advanced chips in the world.”
Associated Press contributed reporting