© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
AI chipmaker Nvidia said on Thursday (September 18) it would invest $5 billion in its struggling rival Intel, in a deal which shows how the changing dynamics of the technology world have reshaped the industry. The investment, which gives a lifeline to Intel, comes just weeks after US President Donald Trump said the government would acquire a 10 per cent stake in the legacy chipmaker.
Nvidia and Intel’s offices are on the same street in Santa Clara, California, just a few minutes’ drive away from each other, and yet in recent years their fortunes have taken widely divergent turns. Once the dominant force in chipmaking, Intel has struggled to keep pace with the mobile and AI era, and as a result, has seen its star diminish to a point where the company going out of business seemed like a realistic outcome. Nvidia, on the other hand, is powering a global artificial intelligence boom.
While the investment from Nvidia offers it a lifeboat, it is also a cruel fate of irony for Intel. In 2005, Intel’s board was presented with the idea of buying Nvidia – then an upstart – for $20 billion. The idea was promptly rejected by the board, owing to the company’s patchy history in absorbing acquired entities. Today, the tables have turned.
What the deal entails, what’s missing
Nvidia’s investment will give it a roughly 4 per cent stake in Intel, making it one of the biggest shareholders of the company. Following the deal, Intel’s shares jumped more than 23 per cent.
Broadly, the two will work to develop personal computers and data centre chips. As part of the investment, companies will focus on connecting Nvidia and Intel architectures using Nvidia NVLink — integrating the strengths of NVIDIA’s AI and accelerated computing with Intel’s leading CPU technologies and x86 ecosystem to deliver cutting-edge solutions for customers. For data centres, Intel will build Nvidia-custom x86 CPUs that the company will integrate into its AI infrastructure platforms and offer to the market.
For personal computing, Intel will build and offer to the market x86 system-on-chips (SOCs) that integrate Nvidia RTX GPU chiplets. These new x86 RTX SOCs will power a wide range of PCs that demand integration of CPUs and GPUs.
However, it is worth noting that the deal does not involve Intel’s contract manufacturing business (or foundry) making computing chips for Nvidia. Analysts believe that for the company’s foundry business to survive, it will need at least one big client, such as Apple, Nvidia, or others.
“AI is powering a new industrial revolution and reinventing every layer of the computing stack — from silicon to systems to software. At the heart of this reinvention is NVIDIA’s CUDA architecture,” said NVIDIA founder and CEO Jensen Huang. “This historic collaboration tightly couples NVIDIA’s AI and accelerated computing stack with Intel’s CPUs and the vast x86 ecosystem — a fusion of two world-class platforms. Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
Beyond the numbers
Intel, once the chip industry’s flag bearer, appointed a new CEO, Lip-Bu Tan, in March, but he quickly came under fire from President Trump over his alleged connections with China. As calls for the new CEO’s resignation gained traction, Intel agreed to give the US administration a 10 per cent stake in the company.
The deal between Nvidia and Intel also comes as China has vowed to build its own domestic alternatives to the giants in a bid to reduce dependence on American technology. On Thursday, the Chinese technology giant Huawei said it was expanding AI chip development, which could challenge Nvidia, at least in the Chinese market.
