Nvidia Bets $5 Billion on Intel in Surprise Chip Partnership

Nvidia to purchase $5 billion of Intel stock and co-develop custom data-center and PC chips

Lead: Nvidia announced on Thursday that it will invest $5 billion in Intel and work jointly to design next-generation data-center and personal-computer processors, aiming to fuse AI and x86 computing architectures in a deal that underscores the strategic importance of high-speed chip integration.

Nut Graf: The partnership marks a dramatic shift for Intel, which has struggled to regain market leadership, and for Nvidia, which aims to secure a stable supply of CPUs and strengthen its position in AI infrastructure. By combining Nvidia’s GPU-centric AI expertise with Intel’s manufacturing and CPU technologies, both companies expect to accelerate innovation and expand their ecosystem reach.

Deal Structure and Investment

  • Nvidia will buy Intel common stock at $23.28 per share, valuing the investment at $5 billion, subject to regulatory approval and customary closing conditions.
  • Upon closing, Nvidia is projected to hold at least a 4% stake in Intel, becoming one of its largest shareholders.

Co-Development Plans

  • Data-Center CPUs: Intel will design NVIDIA-custom x86 processors to be integrated into Nvidia’s AI infrastructure platforms, enabling faster chip-to-chip communication via NVLink.
  • PC SoCs: Intel will build x86 system-on-chips incorporating Nvidia RTX GPU chiplets, targeting high-performance personal computers that demand tight CPU-GPU integration.

Market Impact and Strategic Rationale

Intel’s stock jumped over 12% in premarket trading, reflecting investor optimism about fresh capital and technological synergies. Nvidia gains assurances of long-term CPU supply and deeper control over AI server architectures, while Intel secures a vote of confidence from a leading AI pioneer.

Competitive and Regulatory Context

  • The partnership does not include a foundry agreement; Nvidia will continue outsourcing most chip production to Taiwan’s TSMC.
  • Analysts note that Intel’s foundry business must eventually land large customers such as Nvidia to remain viable.
  • The transaction follows recent investments in Intel from SoftBank and the U.S. government, bolstering Intel’s cash position ahead of planned capital expenditures.

Next Steps

A joint webcast press conference with Jensen Huang and Intel CEO Lip-Bu Tan is scheduled for 10 a.m. Pacific (1 p.m. Eastern) Thursday to detail the collaboration roadmap. Both companies will develop multiple generations of co-engineered products, with timelines to be announced at a later date.