Opponents become teammates! NVIDIA Corporation (NVDA.US) announced a major investment of $5 billion in Intel Corporation (INTC.US) to jointly develop PC and data center chips.

NVIDIA Corporation (NVDA.US) announced that it has agreed to invest $5 billion in its competitor Intel Corporation (INTC.US). The two companies will collaborate in the development of chips for personal computers (PCs) and data centers, which will help Intel Corporation address current business challenges. The companies announced on Thursday that NVIDIA Corporation will acquire Intel Corporation common stock at a price of $23.28 per share. As part of the collaboration plan, Intel Corporation will adopt NVIDIA Corporation's graphics processing technology in its next generation of PC chips and provide processor support for data center products based on NVIDIA Corporation hardware. However, the two sides did not disclose a timeline for the release of the first jointly developed chip, and stated that this collaboration will not affect their respective future independent development plans. Following the announcement, Intel Corporation's stock price surged by 28% in pre-market trading. Prior to this investment from NVIDIA Corporation, Intel Corporation had already received multiple rounds of external support: in August of this year, the U.S. government approved the acquisition of approximately 10% of Intel Corporation's shares, and U.S. President Donald Trump personally endorsed the deal. The Japanese SoftBank Group Corp. had previously promised to invest billions of dollars in the U.S. chip manufacturing and cloud infrastructure sectors, and unexpectedly added $2 billion to its investment in Intel Corporation last month. Intel Corporation also raised funds by selling assets to investors. Due to market share losses, Intel Corporation's current business operations have struggled to support the massive investments required for cutting-edge semiconductor research and development. The collaboration between these two California-based competitors highlights a fundamental shift in the power dynamics of the global computer industry. While Intel Corporation once considered NVIDIA Corporation a "niche player on the industry's sidelines," it now relies on the latter for financial support and leading-edge technology. NVIDIA Corporation CEO Jensen Huang stated in a release, "This milestone collaboration will tightly integrate NVIDIA Corporation's artificial intelligence (AI) and accelerated computing technology stack with Intel Corporation's central processing units (CPUs) and vast x86 ecosystem, uniting two world-class platforms. Through this partnership, we will collectively expand the ecosystem map and lay the foundation for the next era of computing." In the PC chip sector, Intel Corporation plans to launch products that combine general processing functions with NVIDIA Corporation's high-performance graphics components to enhance competitiveness against AMD (AMD.US). In recent years, AMD has continuously gained market share in the desktop and laptop chip markets, and is also a major competitor to NVIDIA Corporation in the graphics chip sector. Additionally, as a leader in the AI chip sector, NVIDIA Corporation is still evaluating whether to outsource the production of some chips to Intel Corporation, but currently has no plans to do so. In the data center market, NVIDIA Corporation's AI acceleration chips hold an overwhelming dominant position, and companies like Intel Corporation have been pushed into secondary roles. In this collaboration, Intel Corporation will provide processors to support NVIDIA Corporation's integration into some data center products. As NVIDIA Corporation continues to integrate its AI chips into larger-scale computing clusters, specialized processors are needed to handle general computing tasks that graphics chips are not adept at. Intel Corporation CEO Lip-Bu Tan stated in a release, "Thanks to Jensen Huang and the NVIDIA Corporation team for their investment in us, expressing their trust, and looking forward to creating innovative value for customers through future collaborations. For decades, Intel Corporation's x86 architecture has been the cornerstone of modern computing, and we are pushing innovation across our entire product line to meet the needs of future workloads." As of Wednesday's close, Intel Corporation's market value was $116 billion, meaning that NVIDIA Corporation's investment stake is less than 5%; while NVIDIA Corporation's market value has exceeded $400 billion. With its absolute dominance in AI computing, NVIDIA Corporation is leading the industry towards the future, while Intel Corporation is taking a more pragmatic partnership strategy. Even before OpenAI launched services like ChatGPT, NVIDIA Corporation foresaw the market's demand for new chips and software and completed its technical layout ahead of all competitors. As global leading companies rush to build data centers to seize the advantage in the AI computing era, NVIDIA Corporation's chips have become their top choice. In 2022, Intel Corporation's revenue is still more than twice that of NVIDIA Corporation. This company, named for "Silicon Valley," has long dominated the entire computing field from laptops to data centers with its microprocessors. However, Intel Corporation has been slow to act in launching accelerated chips similar to NVIDIA Corporation's and has failed to gain significant market share in this field. According to Wall Street analysts, NVIDIA Corporation's revenue is expected to reach around $200 billion this year, and at some point next year, a single quarter's revenue from NVIDIA Corporation will surpass Intel Corporation's annual revenue. The scale of just its data center department already exceeds the total sales of any other chip company. Intel Corporation not only failed to anticipate and seize the investment opportunities in AI-specific computing, but also lost its leading position in chip manufacturing, adding to its woes. For decades, Intel Corporation's factories have maintained performance advantages even as other manufacturers release similar products with more advanced manufacturing technologies. Now, Intel Corporation has been forced to entrust Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) to produce its most advanced chips. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's rapid technological breakthroughs have allowed many companies, from Apple Inc. to NVIDIA Corporation, to transform excellent chip designs into industry-leading products. Earlier this year, Lip-Bu Tan took over as CEO of Intel Corporation following the dismissal of Pat Gelsinger. Under this new leader, Intel Corporation has stated that it will adopt a more open development strategy, actively seek partners, and open its factories to competitors.