Nvidia to invest $5 billion in Intel

Acquires 4% stake…Intel shares surge

Nvidia will invest $5 billion (about 6.9335 trillion won) in Intel and begin joint semiconductor development.

Nvidia announced on the 18th that it would purchase $5 billion worth of Intel common stock at $23.28 per share. Nvidia's stake in Intel is estimated to be around 4%. Reuters reported that "the price is discounted compared with Intel's previous closing price ($24.90)" and "it is higher than the price ($20.47) when the U.S. government acquired a 10% stake (about $5.7 billion) last month." Previously, Intel also received a $2 billion investment from SoftBank.

However, the collaboration does not include a foundry (contract semiconductor manufacturing) agreement in which Intel would produce Nvidia's chips. Reuters said, "For Intel to survive in the foundry business it must secure other large customers such as Apple and Qualcomm," adding, "This investment will provide relief to Intel, which had been suffering from funding difficulties."

The two companies also plan to develop new products that combine Intel's customized central processing units (CPU) with Nvidia's graphics processing units (GPU) using technology that increases data processing speeds.

Jensen Huang, Nvidia's chief executive officer (CEO), said, "Through this historic collaboration we can combine Nvidia's world-class artificial intelligence (AI) and accelerated computing technologies with Intel's CPU technology."

The partnership is also expected to affect the global semiconductor industry. Currently, Nvidia's main AI semiconductor production is handled by Taiwan's TSMC. Some of that volume may be taken over by Intel in the future. Analysts say that in the data center semiconductor market, AMD's position — which competes with Intel — could be weakened by an Intel supported by Nvidia. Intel's stock surged on the news of Nvidia's investment.

Reporter Joo-wan Kim kjwan@hankyung.com