AI Chip giant Nvidia invests $5B in struggling Intel

In the past, Nvidia was the GPU dwarf next to CPU giant Intel, now it’s the other way around: AI chip giant Nvidia and struggling chip manufacturer Intel have just announced a far-reaching cooperation for the joint development of AI infrastructure and PC products. As part of the agreement, Nvidia is acquiring $5 billion worth of Intel shares at a price of $23.28 per share. Intel’s stock rose sharply in pre-market trading on Thursday, surging by a hefty 29%.

With a market capitalization of $4.1 trillion, Nvidia is almost 40 times larger than Intel, which has nearly halved since 2021 and now weighs in at “only” about $116 billion on the stock exchange. Intel, which had no chance in the new AI race with its CPUs against the GPU market as well as the ARM architectures prevalent in the mobile sector, recently also had to be supported through a $10 billion U.S. government stake.

Technical Partnership in Focus

The collaboration between the two technology corporations encompasses several product areas:

• Data Centers: Intel will develop and manufacture custom x86 CPUs for Nvidia, which Nvidia will subsequently integrate into its AI infrastructure platforms. These processors will feature Nvidia’s NVLink technology, enabling significantly faster communication between CPU and GPU compared to conventional PCIe connections.
• Personal Computing: For the consumer market, Intel plans to produce x86 System-on-Chips (SoCs) that integrate Nvidia RTX GPU chiplets. These “Intel x86 RTX SoCs” are intended primarily for use in compact gaming laptops and small-form-factor PCs.

Strategic Direction

Nvidia CEO Jensen Huang justifies the partnership with the industrial revolution through AI: “This historic collaboration closely connects Nvidia’s AI and accelerated computing stack with Intel’s CPUs and the extensive x86 ecosystem.”

Intel CEO Lip-Bu Tan sees the cooperation as complementing Intel’s existing strengths: “Intel’s leading data center and client computing platforms, combined with our process technology and advanced packaging capabilities, will complement Nvidia’s AI leadership.”

Market Positioning and Financing

The $5 billion investment gives Nvidia approximately 5 percent of Intel shares. Intel stock rose 33 percent in pre-market trading following the partnership announcement.

The investment joins other strategic capital participations in Intel: The U.S. government recently acquired a 9.9 percent stake for $10 billion, while SoftBank invested $2 billion in Intel shares.

According to the U.S. companies, a key advantage of the new products lies in NVLink integration, which enables up to 14 times higher bandwidth than PCIe connections. The planned x86 RTX SoCs are also expected to feature Uniform Memory Access (UMA), allowing CPU and GPU to access the same memory pool.

Timeline and Market Launch

Nvidia described the partnership as being in early development stages. Specific product specifications and market launch dates were not announced. Industry experts expect lead times of at least one year due to typical processor development cycles.

Both companies emphasized their commitment to multiple product generations, indicating a long-term strategic orientation. Nvidia simultaneously assured that existing roadmaps for ARM-based processors and other architectures will continue unchanged.