Nvidia (NVDA) has announced plans to invest $5 billion U.S. in rival chipmaker Intel (INTC)
as part of a deal to co-develop data centres and personal computer (PC) products.
News of Nvidia’s investment has sent the stock of Intel up 25% in premarket trading. At one point, INTC stock was up as much as 30%.
For its part, Nvidia said it is investing in Intel at a price of $23.28 U.S. per share.
“Together, we will expand our ecosystems and lay the foundation for the next era of computing,” said Nvidia Chief Executive Officer (CEO) Jensen Huang in a news release.
The investment, which is subject to regulatory approval, does not appear to include the manufacturing of Nvidia chips through Intel’s foundry business.
Currently, the vast majority of Nvidia’s microchips and processors are manufactured by Taiwan Semiconductor Manufacturing Co. (TSM).
News of the Nvidia investment in Intel comes a month after the U.S. government took a 10% stake in the company, which specializes in microchips that power personal computers (PCs).
Intel has struggled financially in recent years amid efforts to launch a foundry business that makes microchips for other companies, similar to Taiwan Semiconductor.
However, Intel’s stock has rebounded since the U.S. government took a stake and is now up more than 50% on the year. Intel’s stock is set to open at $32 U.S. a share on Sept. 18.
Nvidia’s stock is up 3% on news of the Intel investment. Its shares have now gained about 25% on the year to trade at $170.29 U.S. each.
