Tech giant Nvidia plans to inject $5 billion into Intel, the troubled tech company.
In a significant move for the technology industry, Nvidia and Intel have announced a partnership to combine their respective strengths in artificial intelligence (AI) technology.
Nvidia's CEO, Jensen Huang, hailed the partnership as a "fusion of two world-class platforms," while stating that the Trump administration had no involvement in the deal. The collaboration will see Nvidia investing $5 billion in Intel, according to a recent announcement.
The partnership aims to combine Intel's conventional computer chips (CPUs) and Nvidia's specialized graphics chips for AI. Intel will make custom chips for Nvidia's AI infrastructure platforms and build chips that integrate Nvidia technology for personal computer products.
The news sent Intel's shares soaring, with an almost 23% jump on the day, marking its biggest one-day percentage gain since 1987. Nvidia's shares also added more than 3%, reflecting the positive sentiment around the partnership.
However, the deal has yet to include a manufacturing agreement between the two companies. This comes as Intel falls into a slump after missing the shift to the mobile computing era and has been struggling in recent years amid the AI boom that's propelled Nvidia.
Intel lost nearly $19 billion last year and another $3.7 billion in the first six months of this year, and expects to slash its workforce by a quarter by the end of 2025. The partnership with Nvidia is seen as a strategic move to bolster Intel's position in the AI market.
The deal adds to a positive period for Intel, following years of struggle for investors. Meanwhile, shares in AMD, another U.S. chipmaking rival, dropped slightly in response to the Nvidia-Intel deal.
The potential access to Intel's chip foundries by Nvidia poses a risk to Taiwan Semiconductor Manufacturing Company, the world's largest contract chip maker.
The partnership comes as China-based Huawei is expanding its development of AI chips and manufacturing. Chinese officials have reportedly forbidden several domestic companies from purchasing Nvidia chips, indicating a growing trend towards self-reliance in semiconductor technology.
The US government acquired a 10% stake in Intel last month for $8.9 billion as part of subsidies to boost domestic chip manufacturing. Jensen Huang, CEO of NVIDIA, did not mention this investment in his statements, likely due to his focus on balancing relations between Washington and Beijing and NVIDIA's position in the competitive semiconductor market.
Analysts believe the partnership brings Intel "front and center into the AI game." Daniel Ives, a Wedbush Securities analyst, stated that the deal is a "game-changing opportunity" for Intel.
The partnership is a significant step forward for both Nvidia and Intel, and is expected to have far-reaching implications for the AI industry and the global semiconductor market.
