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Nvidia invests $5 billion in beleaguered Intel

MacDailyNews

Sep 18

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On Thursday, Nvidia announced a $5 billion investment in Intel, bolstering the struggling U.S. chipmaker shortly after the Trump administration secured a major federal government stake in the company. This investment will position Nvidia as one of Intel’s top shareholders, holding approximately 4% of the company following the issuance of new shares to finalize the deal.

Stephen Nellis, Max A. Cherney, and Jeffrey Dastin for Reuters:
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Nvidia’s support represents a new opening for Intel after years of turnaround efforts failed to pay off, and it triggered a jump in the U.S. manufacturer’s shares.
The new pact includes a plan for Intel and Nvidia to jointly develop PC and data center chips, but crucially will not involve Intel’s contract manufacturing business, known as a “foundry” in the chip industry, making chips for Nvidia. Most analysts believe that for Intel’s foundry to survive, it would need to win a large customer such as Nvidia, Apple, Qualcomm, or Broadcom.
Nvidia, whose must-have chips are powering a global artificial intelligence boom, said it would pay $23.28 per share for Intel common stock, slightly below the $24.90 Wednesday closing price but higher than the $20.47 price the U.S. government paid.
The companies did not disclose the financial terms of their collaboration but said they would make “multiple generations” of future products. Nvidia and Intel officials described the collaboration as a commercial arrangement under which they will provide chips to one another to create products, with no licensing component.
Under the terms of the deal, Intel will design custom data center central processors Nvidia plans to package with its AI chips, known as GPUs. A proprietary Nvidia technology will let the Intel and Nvidia chips communicate at higher speeds than before.
For consumer markets, Nvidia will provide Intel with a custom graphics chip that Intel can package with its PC central processors with the same speedy links, potentially giving it an edge against rivals such as AMD.

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MacDailyNews Take: Alternatively, Nvidia could have just set $5 billion afire, a feat it could’ve easily achieved simply by tossing the money onto an Intel processor.

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