Nvidia plans to invest $5 billion in chipmaker Intel as the two Big Tech companies have agreed to co-develop data center and PC chips. The news comes on the heels of the U.S. government acquiring a 9.9% stake in Intel via an $8.9 billion investment in the company last month.
Intel shares spiked 29% in pre-market trading Thursday on the news. Nvidia shares saw a 3% increase.
“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,” said Nvidia CEO Jensen Huang in a statement .
Nvidia will buy Intel shares at a price of $23.28, slightly less than the company’s closing price on Wednesday, but more than the $20.47 per share the government paid. The deal will require regulatory approvals and will make Nvidia a 4% owner of Intel.
The CEOs of the two companies will hold a press conference Thursday at 1:00 p.m. ET to discuss the deal.
While the companies will work together to develop the new chips, Nvidia has not yet committed to a manufacturing deal with Intel for them. Instead, it will design custom processors for data centers, which Nvidia will sell alongside its AI GPUs. Nvidia will ensure its chips and the Intel chips communicate at higher speeds, which will encourage adoption.
For the PC market, Intel will build and offer chips that integrate Nvidia’s RTX GPU, which should be popular with gamers and individuals who still attempt to mine Bitcoin from home.
“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,” said Lip-Bu Tan, CEO of Intel.
It has been quite a ride recently for Tan. Last month, Donald Trump demanded his resignation , accusing him of having ties to China and saying Tan “must resign, immediately. There is no other solution to this problem.”
Two weeks later, the government announced an investment in Intel and halted all criticism of Tan. The stock has increased 28% since Trump’s comments, not counting Thursday’s pre-market gains. With those, the jump is 65%.
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