Nvidia hands a $5bn boost to Intel
Nvidia is investing $5 billion in Intel, the struggling rival US chipmaker, in a deal that will lead to the duo jointly developing PC and data centre chips.
The partnership, which signals additional support for Intel after years of turnaround efforts, sent Intel’s share price sharply higher, with the stock ending up by $5.67, or 22.8 per cent, to $30.57.
Nvidia will become one of Intel’s biggest shareholders, owning about 4 per cent of the company, after new shares are issued to complete the deal. The agreement comes weeks after the White House took a 10 per cent stake in Intel.
Intel, founded in 1968, was one of Silicon Valley’s biggest success stories, designing and manufacturing microchips for the burgeoning computer industry.
However, the company, headquartered in Santa Clara, California, has struggled to compete after missing out on the boom in artificial intelligence chips. Intel shares have fallen almost 50 per cent in the past five years, overtaken by Nvidia, now the world’s most valuable public company. The market capitalisation of Intel was $116 billion prior to market opening on Thursday, while Nvidia’s market value was $4.1 trillion.
The partnership includes a plan for Intel and Nvidia to jointly develop PC and data centre chips, but will not involve Intel’s contract manufacturing business making chips for Nvidia.
Nvidia, whose sought-after chips are powering a global AI boom, said it would pay $23.28 per share for Intel common stock, a price slightly below the $24.90 at which Intel shares closed on Wednesday. However, that is higher than the $20.47 price per share that the US government paid for the stake it took in Intel last month. Nvidia’s shares rose by $5.95, or 3.5 per cent, to $176.24 in New York.
● Nvidia has announced an investment of £2 billion into the UK’s AI start-up ecosystem, in collaboration with a number of venture capital firms, including Accel, Balderton and Hoxton Ventures. The world’s dominant supplier of chips for AI said that the funding would bring new capital and advanced AI infrastructure to major UK hubs such as London, Oxford, Cambridge and Manchester.
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