Nvidia Allocates $5 billion to Intel Amidst its Struggles

Nvidia plans to invest $5 billion in Intel by buying common stock at $23.28 per share, forming an unexpected strategic partnership with the struggling chip manufacturer.

Nvidia CEO Jensen Huang characterised the Intel partnership as a strategic integration of complementary technologies, indicating a move toward AI-focused computing that combines Intel’s CPU tradition with Nvidia’s GPU leadership.

Intel’s stock surged nearly 23%, its biggest daily increase in decades, as Nvidia rose over 3% following news of the $5 billion deal.

Intel will develop specialised chips for Nvidia’s AI platforms and partner on PC processors that integrate Nvidia’s technology.

The agreement injects crucial support for Intel, which struggled to adapt after falling behind in the mobile shift sparked by the iPhone in 2007. 

Intel has experienced a significant decline since the rise of AI, elevating Nvidia to one of the most valuable companies. Intel’s losses are worrying, having lost $19 billion last year and an additional $3.7 billion in the first half of this year.

The U.S. government became a major Intel shareholder last month, acquiring a 10% stake to strengthen domestic technology. Following Nvidia’s $5 billion investment, Intel’s stake value climbed to $13.2 billion. 

Nvidia’s Jensen Huang and Intel CEO Lip-Bu Tan called the partnership transformative, positioning Intel alongside Nvidia’s AI chip dominance. Experts regard this as a significant boost for U.S. technology and investor confidence.

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AMD shares fell as Nvidia and Intel announced their collaboration, part of China’s initiative to decrease dependence on U.S. semiconductor technology. While the two companies are collaborating on chip development, a manufacturing deal is still pending, with Taiwan’s TSMC continuing as Nvidia’s primary foundry partner.