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Nvidia, the dominant player in the artificial intelligence chip market, has announced a $5 billion (£4 billion) investment in Intel, providing a critical financial boost and forging a strategic partnership with its struggling competitor. The deal, unveiled on Thursday, and following recent US government funding, focuses on collaborating to develop advanced chips for personal computers and data centers. The move comes as demand for AI technology continues to grow rapidly, requiring increasingly powerful data processing capabilities.
This investment will make Nvidia one of Intel's largest shareholders, giving it a significant influence over the semiconductor company with a roughly 4% stake.
Intel's stock surged more than 25% on news of the deal, which could boost the once-dominant chipmaker. Shares in Nvidia rose roughly 3%.
Intel has struggled in recent years to build out more chip capacity. It has fallen far behind rival Nvidia, which has dominated the AI boom by offering chips that are crucial for developing the technology.
Nvidia's market cap has soared past $4 trillion while Intel's has languished at around $100bn.
The new collaboration represents "a fusion of two world-class platforms", Jensen Huang, Nvidia's CEO, said in a statement.
"Together, we will expand our ecosystems and lay the foundation for the next era of computing," Mr Huang added.
In late August, the Trump administration announced that the federal government would take a 10% stake in Intel. At the time, Commerce Secretary Howard Lutnick called the White House investment a "historic" agreement that "strengthens US leadership in semiconductors, which will both grow our economy and help secure America's technological edge".
The Trump administration's announcement came after Intel became a target of US President Donald Trump. The president had accused Intel CEO Lip-Bu Tan of having problematic ties with China and called on him to resign, though Mr Tan called the accusations "misinformation".
In response to the latest investment from Nvidia, Mr Tan said: "We appreciate the confidence Jensen and the Nvidia team have placed in us."
Intel's semiconductors were once a crucial part of the popularity of personal computers. But the company has failed to maintain its dominance in Silicon Valley over the past two decades. It has most recently taken a hit from its struggles to profit from the AI surge, in contrast to Nvidia's success.
