Intel Corp stock soared after the world’s largest company NVIDIA announced it would take a US$5 billion (A$7.6 billion) stake in its struggling smaller rival as part of a new collaboration between the two technology companies.
The Intel (NASDAQ: INTC) price closed $5.67 (22.77%) higher at $30.57 on Thursday (Friday AEST), capitalising the semi-conductor maker at $142.77 billion.
NVIDIA said it would invest $5 billion in Intel’s common stock at $23.28 per share, giving it a shareholding of about 4%, subject to customary closing conditions, including required regulatory approvals.
The share purchase was disclosed as the two companies announced a collaboration to develop ratification intelligence (AI) infrastructure and personal computing products.
NVIDIA and Intel said they would jointly develop multiple generations of custom data centre and personal computer products that accelerate applications and workloads across hyperscale, enterprise and consumer markets.
NVIDIA founder and CEO Jensen Huang said the collaboration would fuse NVIDIA’s AI and accelerated computing stack and Intel’s central processing units and x86 ecosystem.
“Together, we will expand our ecosystems and lay the foundation for the next era of computing,” Huang said in a statement.
The companies will focus on connecting NVIDIA and Intel architectures using NVIDIA NVLink while Intel will build NVIDIA-custom x86 CPUs that NVIDIA will integrate into its AI infrastructure platforms and offer to the market.
“This is a massive game-changer for Intel and effectively resets its position of AI-laggard into a cog in future AI infrastructure," eMarketer Senior AI and Tech Analyst Gadjo Sevilla was quoted in a Reuters story as saying..
The announcement comes only weeks after the United States Government agreed to take a 10% stake in Intel, whose dominant position in the semiconductor market has been eroded over the last decade by competition from NVIDIA and others.
This unusual move helped resolve a dispute with President Donald Trump, who had called for the resignation of new Intel CEO Lip-Bu Tan due to concerns about his connections with China.
Nvidia shares (NASDAQ: NVDA) closed $5.95 (3.49%) higher at $176.24, capitalising the company at $4.28 trillion, cementing its place as the world’s most valuable company and 35 times larger than Intel.
