Nvidia to invest $5 billion in Intel to develop data center, PC products
Story Highlights
- Nvidia invests $5 billion in Intel for joint development
- Intel will build custom CPUs for Nvidia’s AI platforms
- Intel’s stock surged 28% following the announcement
Nvidia is investing $5 billion in Intel Corp. to jointly develop and manufacture customer data center and computer products, the two companies announced Thursday.
Under terms of the deal, Nvidia will acquire $5 billion worth of Intel’s common stock at a price of $23.48 per share, equating to a 4% stake in the chipmaker. The investment is subject to customary closing conditions and regulatory approval, according to a company release.
“AI is powering a new industrial revolution and reinventing every layer of the computing stack — from silicon to systems to software. At the heart of this reinvention is NVIDIA’s CUDA architecture,” NVIDIA Founder and CEO Jensen Huang said in a statement. “This historic collaboration tightly couples NVIDIA’s AI and accelerated computing stack with Intel’s CPUs and the vast x86 ecosystem — a fusion of two world-class platforms. Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
As part of the deal, Intel will build custom x86 CPUs that Nvidia will integrate into its AI infrastructure platforms for data centers. Intel will also build x86 system-on-chips that integrate into Nvidia’s RTCX graphic processing units to power computers.
“Intel’s leading data center and client computing platforms, combined with our process technology, manufacturing and advanced packaging capabilities, will complement NVIDIA’s AI and accelerated computing leadership to enable new breakthroughs for the industry,” Lip-Bu Tan, CEO of Intel, said in a statement. “We appreciate the confidence Jensen and the NVIDIA team have placed in us with their investment and look forward to the work ahead as we innovate for customers and grow our business.”
Intel’s stock rocketed on Thursday on news of the deal, reaching as high as $32.28 a share. The company’s stock price closed at $30.57, up nearly 23% on the day to elevate its market value to nearly $143 billion. Intel’s stock is up 52.5% year-to-date, as of Sept. 18.
In an investor note, Wedbush analyst Dan Ives called the Nvidia investment in Intel a “game changer” as it brings the company “front and center into the AI game.”
“Along with the recent U.S government investment for 10% this has been a golden few weeks for Intel after years of pain and frustration for investors,” he wrote.
During a Thursday morning call with reporters, Jensen said the products made via its partnership with Intel will have a total annual addressable market of $25 billion to $50 billion. With Intel x86 GPUs integrated directly into Nvidia’s NVLink platform, it allows the company to create rack scale AI supercomputers for data centers, Huang said.
What’s more, the integration of Intel’s x86 SOC into Nvidia’s GPUs would create a “new class of integrated graphics laptops that the world has never seen before,” Huang added.
“That entire segment of the market is really quite rich and really quite large, and it’s underserved today,” Huang said.
It’s unclear whether Intel will be building the custom x86 CPUs and SOCs at its Ocotillo plant in Chandler, where it began initial production earlier this year of advanced silicon wafers using its 18A process technology. An Intel spokesperson told the Business Journal the company has no further details to share at this time.
Huang and Tan did not disclose whether Nvidia will use Intel’s foundry to make advanced chips, stating the announcement today is focused on custom CPUs.
Huang, however, pointed out that Nvidia will be a major customer of Intel server CPUs. Both Huang and Tan praised the manufacturing capabilities of Taiwan Semiconductor Manufacturing Co., of which both companies are a customer.
“TSMC has been a great partner, (a) longtime partner for Nvidia and also for Intel,” Tan said. “So we’re going to continue doing that.”
Nvidia’s announcement comes nearly a month after the federal government agreed to invest $8.9 billion in Intel, equating to a 9.9% stake in the struggling chipmaker, which has been undergoing a dramatic cost-cutting and turnaround effort in recent months led by Tan.
Nvidia’s deal with Intel builds upon a separate investment by Japanese firm Softbank Group Corp., which in August agreed to acquire $2 billion worth of Intel shares to accelerate access to advanced technologies to support digital transformation, cloud computing and next-generation infrastructure.