Nvidia announced Thursday it will pour $5 billion into Intel, delivering a major vote of confidence to the struggling chipmaker.
The move comes only weeks after the White House arranged for the federal government to take a 10% stake in Intel—an extraordinary step to stabilize the company.
The investment immediately boosted Intel’s stock by 23%, making Nvidia one of Intel’s largest shareholders with about 4% ownership once new shares are issued. Once the pride of Silicon Valley, Intel has struggled with repeated turnaround efforts.
In March, the company appointed Lip-Bu Tan as CEO, but his leadership quickly drew criticism from the U.S. President Donald Trump, who raised concerns about Tan’s links to China.
That controversy prompted an emergency meeting in Washington, leading to the government’s unprecedented investment.
Nvidia CEO Jensen Huang clarified that the Trump administration was not part of this new deal, though he believed officials would have supported it. Huang appeared with Trump during the president’s visit to the United Kingdom on Thursday.
Joint Chip Development but Not Manufacturing
The partnership will see Intel and Nvidia collaborate on designing chips for PCs and data centers. However, the arrangement does not extend to Intel’s foundry business producing chips for Nvidia.
Instead, Intel will supply processors and advanced packaging for joint products. Huang noted Nvidia has been working with Intel for nearly a year and continues to assess its foundry capabilities.
Analysts say Intel’s foundry unit can only survive by securing a major client like Nvidia, Apple, Qualcomm, or Broadcom.
“This may be the first step of an acquisition or breakup of the company (Intel) among U.S. chip makers though it is entirely possible the company will remain a shadow of its former self but will survive,” said Nancy Tengler, CEO of Laffer Tengler Investments.
Nvidia, whose chips are central to the AI boom, will pay $23.28 per Intel share—below Wednesday’s close of $24.90 but above the $20.47 paid by the U.S. government. Nvidia’s shares rose 3.8% following the news.
The two companies declined to reveal full financial details but committed to building “multiple generations” of new products.
This comes on top of Intel’s recent $2 billion boost from Softbank and $5.7 billion from Washington. Tan has pledged to slim operations and expand capacity only when demand requires.
“This is a massive game-changer for Intel and effectively resets its position of AI-laggard into a cog in future AI infrastructure,” said Gadjo Sevilla of eMarketer.
The deal poses a competitive threat to TSMC, which currently makes Nvidia’s flagship processors, and to AMD, which supplies chips to data centers.
Intel will now design custom processors to work seamlessly with Nvidia’s GPUs, enabling faster data transfers—a critical edge in AI.
AMD stock dipped 1.3%, while Broadcom slipped 0.5%. The companies have not given a timeline for their first joint products.
Read next: Meta unveils display-equipped smart glasses in bid for ‘superintelligence’