In a significant move, Nvidia, a leading player of the AI industry, has invested $5 billion in struggling rival Intel and collaborating to develop chips for data centers and PCs.
This move marks a remarkable boost for Intel, which agreed to allow the US government to take a 10% equity for $8.9 billion to strengthen its operations.
According to the agreement, Nvidia will purchase Intel common stock at $23.78 per share, nearly 7% less than Wednesday’s closing price.
After the major announcement, Intel’s stock skyrocketed over 30% in pre-market trading, offering an early paper gain to Nvidia.
Nvidia CEO Jensen Huang called the deal “a historic collaboration” that combines Nvidia’s AI and next-gen computing with Intel’s CPUs and x86 ecosystem, laying the foundation for a new era of computing.
As part of the partnership, Intel will make CPUs for the leading AI manufacturer to incorporate into its AI infrastructure for data centers and will create PC chips merging Intel processors and Nvidia graphics chiplets.
The agreement comes amid the rising geopolitical feuds over semiconductors, US efforts to strengthen its resources for domestic chip manufacturing, and increasing demand ignited by AI.
However, it remains under wraps if Nvidia will use Intel’s foundry for manufacturing side, as several US firms such as Nvidia and Apple depend on TSMC, which is expanding US operations.
Nvidia and Intel leaders have scheduled a joint press conference on Thursday at 1 p.m. ET.