Struggling chipmaker Intel, which once powered nearly every personal computer in the market, is set to receive a $5 billion investment from Nvidia, which is aiming to purchase roughly 4% in its stock. This investment is seen as a hedge for Nvidia’s supply chain, as Intel will design and manufacture its custom x86 CPUs for Nvidia’s AI server platforms, a crucial component for AI data server processing.
This development comes at a time when Intel has struggled to keep pace with the AI-led tech revolution, with the company’s CEO Lip-Bu Tan trying to do everything he can to restore the brand’s legacy.
Nvidia’s stock acquisition is a shot in the arm for Intel, as it still has the capabilities to execute highly complex manufacturing procedures required for semiconductors. Intel is one of the few companies who can meet the stringent technical requirements for Nvidia’s NVLink 72 rack-scale architecture, and this development is expected to help Nvidia diversify its supply chain from tightly coupled NVLink systems based on ARM’s Grace architecture.
Before the AI wave, Intel had a 70% data center market share in 2021, which has reduced to just 7% this year, even as Nvidia and TSMC have surged ahead. The company hasn’t been able to innovate like other peers, with investor confidence slumping on its repeated execution falilures and lack of technological leadership.
For the past two months, Intel has been in talks to acquire US-based AI chip startup SambaNova Systems, specialising in developing custom digital infrastructure for organizations looking to customize generative AI as per their use cases.
Though there hasn’t been any clear update on this yet, Intel’s decline has even caught the attention of US President Donald Trump, who has even suggested investing in its long-delayed Ohio factory to help its sagging fortunes.
For Nvidia, investing in its competitor has been a strategic move to secure talent and supplies, even as its GPU’s that are responsible for powering AI data centers worldwide, continue to be manufactured by TSMC.
