The deal comes just weeks after the White House orchestrated an unprecedented move by the U.S. government to take a large stake in Intel. The investment would make Nvidia one of Intel's largest shareholders, with a stake of about 4% or more after the new shares are issued. Nvidia's backing opens up new prospects for Intel after failed reorganization attempts in recent years and has already sent the company's shares up 30% in premarket trading.
Intel, once a leader in the microchip industry, named Lip-Bu Tan as its new CEO in March. But he has faced criticism from U.S. politicians, including President Donald Trump, over his ties to China. As a result, an agreement was reached in Washington to transfer 10% of Intel's shares to the United States.
Under the new pact, Intel and Nvidia will work together to develop processors for PCs and data centers. Intel's contract manufacturing (“foundry”) will not be involved in the production of Nvidia chips. Experts note that for Intel's manufacturing business to survive in the future, a large customer such as Nvidia, Apple, Qualcomm or Broadcom is needed.
Nvidia, whose chips have become the basis of the global artificial intelligence boom, announced that it would buy Intel shares at a price of $23.28 per share – below the closing price ($24.90) but above the price of $20.47 at which the US government bought the shares a month ago.
Analysts see the deal as Nvidia's attempt to diversify its investments within the U.S. and strengthen its relationship with the government. At the same time, the deal carries risks for TSMC, Nvidia's largest chipmaker, as well as AMD, which competes with Intel in the data center segment. After the news, Nvidia shares rose 3%, AMD fell 4%, and TSMC fell 2%.
Under the deal, Intel will develop custom processors for data centers that Nvidia will pair with its GPUs. Nvidia's proprietary technology will provide faster communication between chips, which is critical for artificial intelligence systems. This gives Intel a chance to make money on every Nvidia server and compete with AMD and Broadcom.
For the consumer segment, Nvidia will provide Intel with custom graphics chips for PCs. This will allow Intel to strengthen its position in a market where its x86 architecture has lost share to ARM-based solutions.
“This is a historic collaboration that brings together Nvidia's AI technology stack with Intel processors and the entire x86 ecosystem, laying the foundation for the next era of computing,” said Nvidia CEO Jensen Huang.
The companies did not disclose financial details of the partnership, but announced plans to release “multiple generations” of joint products. According to representatives, this is an exclusively commercial collaboration without licensed components.
Analysts note that for Nvidia, the direct financial effect of the deal will be limited, but the political benefit is enormous: the partnership is in line with US policy and could ease restrictions on chip supplies to China.
Nvidia has struggled to sell its H20 chips in China in recent months. In August, Trump brokered a deal that allowed Nvidia to sell H20s in exchange for a 15% cut of sales, but the company said it has yet to ship the chips to China.
The exact timing of the first joint products is not known. Nvidia continues to develop the direction of processors for PCs and data centers, while Intel is developing its own AI servers that compete with Nvidia.
Source: Reuters
