&imwidth=800&imheight=600&format=webp&quality=medium "Nvidia to invest $5 billion in Intel, to jointly develop PC, data center chips")
Chipmaker Nvidia on Thursday announced that it would invest $5 billion in Intel, another US chip giant. After theannouncement, Intel's shares rose 30 per cent in premarket trading. Nvidia, one of the largest chip companies, said it would buy Intel's common stock at $23.28 per share and would jointly develop with the company data center and personal computing products. Nvidia's stock also went up 3 percent in premarket trading.
According to reports, Intel will build Nvidia-custom x86 CPUs. These CPUs will be used by Nvidia to integrate into its AI infrastructure platforms.
"Together, we will expand our ecosystems and lay the foundation for the next era of computing,” said NVIDIA chief executive Jensen Huang, according to WSJ.
After thestake purchase, Nvidia will become Intel's largest shareholder with over 4 per cent stake in the company.
Intel, which used to be the flagbearer of the chip industry, appointed its new CEO, Lip-Bu Tan, in March. He came under Donald Trump's fire as the latter asked him toresign, citing his connections with China. The allegations paved the way for an unusualdeal -- the United States buying a 10 per cent stake in the company.
Nvidia and Intel's agreement also entails the development of PC and data center chips. However, it will not involve Intel's contract manufacturing business, which is called foundry in the chip industry.
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Nvidia is currently focusing on the world's AI-powering chips. Its share prices will be slightlylower than Wednesday's share price of$24.90.
It will be, however, significantly more than the share price offered by the US government for 10 per cent of the company -- $20.47 per share.
Chris Beauchamp, chief market analyst at IG Group in London, told Reuters that the decision shows Nvidia wants to diversify its investment within the United States and also wants to score brownie points with the Donald Trump administration.