Nvidia is engaged in a substantial, multi-billion dollar collaboration project with Intel.
In a surprising turn of events, tech giants Nvidia and Intel have announced a partnership that could reshape the semiconductor industry.
Nvidia's stock gained around 3 percent in pre-market US trading, indicating a positive market response to the news. Meanwhile, Intel's stock surged by up to 29 percent, suggesting a much-needed boost for the company that has been losing market share for years.
The partnership will see Intel providing its processors for data center products based on Nvidia hardware. This move is a significant step for Intel, which has faced strong competition from Nvidia, especially in the AI chip business where Nvidia has taken a leading position.
For Intel, the new CEO, Lip-Bu Tan, has been pushing for change. Tan wanted to establish Intel as a contract manufacturer for other chip companies and expand capacity. This partnership with Nvidia could be a step towards achieving that goal.
Tan also announced the cancellation of billion-dollar plans for a factory in Germany in July, a decision that may have been influenced by the new partnership.
In addition, Intel will use Nvidia's graphics technology in future PC chips, a move that could strengthen Intel's position in the traditional PC processor market.
The partnership is not just about financial gains for Nvidia. Analyst Matt Britzman of Hargreaves Lansdown believes that Nvidia's investment is less about money and more about influence. For Nvidia, the political benefit of the partnership is great, especially considering Intel's traditional dominance in the semiconductor market.
The US government has expressed its intention to acquire a 10 percent stake in Intel, and Japan's SoftBank Group has invested $2 billion in Intel as part of a capital increase last month. These developments suggest that Intel is under pressure to perform and could benefit significantly from the partnership with Nvidia.
Interestingly, another partnership is being established between two unspecified companies for the joint development of chips for data centers and PCs. This could be a sign of a broader industry shift, with companies recognising the need to collaborate to stay competitive in the fast-evolving semiconductor market.
The partnership between Nvidia and Intel is a testament to the dynamic nature of the tech industry and the importance of collaboration in driving innovation. As these two giants join forces, we can expect to see exciting developments in the world of semiconductors.
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