Nvidia to invest $5 billion in Intel, signals chip partnership

Nvidia said that it would invest $5 billion in Intel, just weeks after the White House engineered an extraordinary deal for the federal government to take a massive stake in the US chipmaker.

Nvidia is investing its stake at a price of $23.28 a share, a release from the company said. Following news of the deal, Intel shares closed 22.8% higher to $30.57.

Intel posted its best day since October 1987, while Nvidia shares closed 3.54% higher on Thursday.

Nvidia's support offers Intel a new chance after years of turnaround efforts failed to pay off, and triggered a 23% jump in the U.S. chip manufacturer's shares. The stake will make Nvidia one of Intel's largest shareholders.

“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 release.

Nvidia now joins Softbank and the U.S. government in supporting Intel’s turnaround.

A ‘major milestone’ for Intel

Once the dominant force in chipmaking, Intel has struggled to keep pace with the mobile and AI era, and as a result, has seen its position diminishing to a point where the company going out of business seemed like a realistic outcome. Nvidia, on the other hand, is powering a global artificial intelligence boom.

Nvidia CEO Jensen Huang told reporters that the Trump administration had not been involved in the partnership deal but would have been supportive. Huang was seen with Trump and other business leaders during the U.S. president's state visit to the United Kingdom on Thursday.

This 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 computing chips for Nvidia.

Intel's foundry business will, however, supply the central processors and advanced packaging for the joint products. Huang said his company was continuing to evaluate Intel's foundry technology and had been working with the rival for nearly a year.