Intel stocks available for purchase at a 28% increase - Nvidia acquisition priced at $5 billion
In a significant move for the tech industry, Nvidia and Intel have announced a partnership to jointly develop chips for PCs and data centers. As part of the agreement, Nvidia will invest $5 billion in Intel, acquiring just under 5 percent ownership to support this collaboration.
The U.S. government, recognising the potential of this partnership, has agreed to take a around 10% stake in Intel in August. This move is expected to further bolster the alliance between the two tech giants.
For Intel, the partnership comes as a strategic move to address its manufacturing challenges. The company is now forced to turn to Taiwan Semiconductor Manufacturing Co to produce its best chips. By collaborating with Nvidia, Intel hopes to leverage the latter's advanced technology and manufacturing capabilities.
Nvidia's dominance in the field of AI computing is the basis for its power, and Intel's pragmatic collaboration is a testament to the recognition of this fact. The California-based company has a market capitalization of over $4 trillion, dwarfing Intel's current market value.
The partnership will see Intel providing processors for integration into some data center products based on Nvidia hardware. Intel will also offer PC chips that combine general processing functions with powerful graphics components from Nvidia. This will enable Intel to better compete with Advanced Micro Devices in the PC market.
Nvidia has been at the forefront of the AI revolution, recognising the need for new types of chips and software before the introduction of services like ChatGPT from OpenAI. The company is currently developing its own processors using technology from Arm Holdings Plc.
The collaboration between Nvidia and Intel is expected to be mutually beneficial. Nvidia stands to gain from Intel's vast experience in the PC market, while Intel can leverage Nvidia's expertise in AI and graphics processing.
Under new CEO Pat Gelsinger, Intel wants to take a more open approach, seeking partnerships, and opening its factories to competitors. This shift in strategy is evident in the partnership with Nvidia, and it is expected to position Intel better in the competitive tech landscape.
The Japanese SoftBank Group made a $2 billion investment in Intel last month, further underscoring the confidence in Intel's future under Gelsinger's leadership. As of the close of trading on Wednesday, Intel had a market capitalization of $116 billion, a testament to the optimism surrounding the company's future.
This year, according to Wall Street estimates, Nvidia is on track to achieve around $200 billion in revenue. The partnership with Intel is expected to contribute to this growth, as both companies work together to push the boundaries of technology and innovation.
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