SAN FRANCISCO/WASHINGTON, Sept 19 — Nvidia said yesterday it would invest US$5 billion (RM22 billion) in Intel, throwing its heft behind the struggling US chipmaker just weeks after the White House engineered an extraordinary deal for the federal government to take a massive stake in the company.
Nvidia's support offers Intel a new chance after years of turnaround efforts failed to pay off, and triggered a 23 per cent jump in the US chip manufacturer's shares. The stake will make Nvidia one of Intel's largest shareholders, giving it roughly 4 per cent of the company after new shares are issued.
Intel — once the chip industry's flag bearer that claimed to put the ‘silicon’ in Silicon Valley — appointed a new CEO, Malaysian-born Lip-Bu Tan, in March. He quickly came under fire from US President Donald Trump, who called his resignation due to concerns about his connections with China. This led to a swiftly arranged meeting in Washington that ended with Intel's unusual arrangement to give the US a 10 per cent stake in the company.
Nvidia CEO Jensen Huang told reporters on a call yesterday 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 US president's state visit to the United Kingdom yesterday.
This new pact includes a plan for the two companies to jointly develop PC and data center chips, but crucially, will not involve Intel's contract manufacturing business — or foundry — 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.
Nvidia, whose must-have chips are powering a global artificial intelligence boom, said it would pay US$23.28 per share for Intel common stock, slightly below the US$24.90 Wednesday closing price but higher than the US$20.47 price the US government paid. Nvidia shares were up 3.8 per cent yesterday.
The companies did not disclose the financial terms of their collaboration but said they would make "multiple generations" of future products.
