Tech giant Nvidia pours a colossal $5 billion into Intel's pocket.
Nvidia and Intel, two titans of the tech world, have announced a partnership that promises to shake up the computer industry. The announcement was made by Nvidia CEO Jensen Huang, who stated that this collaboration marks a significant change in the industry.
Nvidia, currently the world's most valuable company with a market capitalization of $4.3 trillion, has achieved explosive growth. Initially known for its graphics cards, Nvidia has now established itself as a key player in the development of chip systems, particularly for training and operating software with artificial intelligence. In fact, in the realm of artificial intelligence, Nvidia is currently unrivaled, with no competitor able to keep pace.
Meanwhile, Intel, once a leading force in the chip industry, has faced a crisis in recent years and has lost much of its significance. The US government, recognizing this, has recently acquired a stake of around ten percent in Intel through a deal converting $8.9 billion in subsidy funds for expanding chip production in the US into shares, without voting rights. This strategic move, initiated by former President Donald Trump, aims to strengthen Intel without influencing its management directly.
The partnership between Nvidia and Intel is significant for the future development of chip technology. Intel plans to increasingly become a contract manufacturer for other chip companies, but potential customers have been hesitant. The companies will collaborate on developing chips, with Intel building processors of its X86 system adapted to Nvidia's technology for data centers.
The billions in subsidies promised last year served as the purchase price for the government's stake in Intel. Intel is also receiving multi-billion dollar support from Nvidia, with Nvidia purchasing Intel shares for five billion dollars. However, the planned plant in Magdeburg was cancelled, marking a scaling back of Intel's ambitious plans to build new factories.
The Intel stock price rose by around 28 percent in US trading at times due to this partnership, indicating a positive response from the market. The US President at the time, Donald Trump, wanted something in return for the subsidies, and the partnership between Intel and Nvidia appears to be that return.
Despite Intel's struggles, the partnership indicates that even the most successful companies are willing to collaborate to stay competitive in the rapidly evolving tech industry. This collaboration between Nvidia and Intel could pave the way for future partnerships and innovations in the chip industry.
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