Nvidia bets big on Intel with $5B stake and chip partnership

Nvidia on Thursday said it will invest $5 billion in Intel, throwing its heft behind the struggling US chip foundry, but stopped short of giving Intel a crucial manufacturing deal.

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The pact, which also includes a plan for Intel and Nvidia to jointly develop PC and data center chips, represents a potential risk to Taiwan's TSMC. TSMC currently manufactures Nvidia's flagship processors, business that the world’s most valuable company could one day extend to Intel. AMD, which competes with Intel for supplying chips to data centers, also stands to lose thanks to Nvidia's backing.

Intel jumped 31 per cent in pre-market trading, while Nvidia was up 2.6 per cent.

Nvidia, whose must-have chips are powering a global artificial intelligence boom, said in a statement it will pay $23.28 per share for Intel common stock, a price slightly below the $24.90 at which Intel shares closed on Wednesday.

However, that is higher than the $20.47 price per share that the United States government paid for an extraordinary 10 per cent stake it took in Intel last month.

Nvidia will become one of Intel’s largest shareholders, likely owning 4 per cent or more of the company after new shares are issued to complete the deal.