Nvidia said it will invest $5 billion in Intel and co-develop custom data center and PC products. The move gives Intel more capital and also solidifies its relevance going forward.
The Nvidia-Intel deal lands following the US government's $8.9 billion investment in Intel common stock. The US government agreed to purchase 433.3 million shares of Intel at $20.47 a share for a 9.9% stake.
Nvidia is buying Intel shares at $23.28 a share.
Intel's partnership with Nvidia covers multiple areas. Here's a look:
- The pact covers multiple generations of products for cloud, enterprise and consumer markets.
- Intel and Nvidia will look to connect architectures using Nvidia NVLink as well as Intel's CPUs with Nvidia GPUs.
- In the data center, Intel will build Nvidia's custom x86 CPUs.
- For PCs, Intel will build and offer x86 system-on-chips that integrate Nvidia RTX GPU chiplets. The x86 RTX SOCs will power a range of PCs.
Nvidia CEO Jensen Huang said the deal "tightly couples NVIDIA’s AI and accelerated computing stack with Intel’s CPUs and the x86 ecosystem" and is aimed at "reinventing every layer of the computing stack."
Intel CEO Lip-Bu Tan lands a big win for its foundry and said "appreciate the confidence Jensen and the NVIDIA team have placed in us."
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Holger Mueller, an analyst with Constellation Research, said:
"This is a strategic move by Nvidia who now gets control on the missing piece in it's chip portfolio - CPUs. If Nvidia manages to tie its chips into the Intel server offerings it will give it an additional foothold in the (on premises) data center. However, partnerships in the chip industry don't last forever. CxOs need to be aware of lock-in, but for now I think CxOs with Intel server farms are happy. Regulatory approval may become an issue as Nvidia was not allowed to acquire Arm some time back. Lastly this Nvidia deal highlights the utter failure of Intel building AI chips."
Speaking at an investment conference earlier this month, Intel CFO David Zinsner said one of Tan’s big initiatives was improving its balance sheet. The investments from the US government and Softbank largely did that and the Nvidia deal adds to that cash cushion.
Zinsner said September 4:
“As we look at the capital we've raised, we feel pretty good about where our balance sheet is. We think we have now at this point strong liquidity. By the way, this quarter itself was a significant quarter in terms of incremental capital raise. We sold almost $1 billion worth of Mobileye stock. We're expecting to close Altera in the next few weeks, that adds another $3.5 billion. I think that the SoftBank money will come in by the end of the quarter, they have to do some regulatory filings and assuming that all of that is pretty clean, we should get that $2 billion. And then we got -- as I said, last week, we got the $5.7 billion from the U.S. government.”
With Intel and Nvidia pairing up it remains to be seen how this will impact AMD, which has been taking share from Intel in the data center and PC markets and remains far ahead on AI accelerators.
