Nvidia to Pour $5 Billion Into Intel's Venture
In a groundbreaking move for the tech industry, Nvidia and Intel, two of Silicon Valley's longest-running competitors, have announced a historic collaboration. As part of the deal, Nvidia will invest $5 billion in Intel, marking a significant shift in the competitive landscape.
The announcement does not refer to Nvidia using Intel's foundry to produce its chips. Instead, the focus of the partnership is on developing new chips for PCs and data centres. Intel will build custom central processing units (CPUs) for Nvidia to incorporate into its AI platforms for data centres.
This collaboration comes at a time when Intel has struggled to gain a foothold in the booming AI server market, while Nvidia's graphics processing units dominate the market for AI infrastructure.
Last month, SoftBank, Arm's majority owner, announced a separate investment, purchasing $2 billion worth of Nvidia stock. However, the impact of this investment on the current deal is unclear.
The news sent Intel's shares surging 29% in pre-market trading, reaching $31.97, their highest level since July last year. Nvidia's own shares rose 3% following the announcement. Shares in Arm, Nvidia's current partner on CPUs, were down 5% in pre-market trading.
The deal comes a month after the US government agreed to take a 10% stake in Intel, a move that was intended to bolster the company's chipmaking operations. However, Intel's chipmaking business has reportedly been losing billions of dollars, and the company has not secured significant external customers for its manufacturing operations.
The investment is part of a broader strategy for Nvidia to strengthen its position in the AI market and expand its product offerings. For Intel, the collaboration presents an opportunity to tap into the lucrative AI market and improve its financial performance.
The deal was announced on Thursday, uniting two of the most influential tech companies in a move that is likely to reshape the tech industry landscape. As the partnership moves forward, both companies will undoubtedly face challenges and opportunities as they work together to drive innovation and growth in the AI sector.
