Nvidia Closes $5 Billion Purchase of Intel Shares

Nvidia founder and CEO Jensen Huang. (BRENDAN SMIALOWSKI/AFP via Getty Images)

Key Points

• Nvidia acquired $5 billion of Intel shares at $23.28 each, 36% below Intel’s Friday closing price, following FTC approval.
• The deal includes integrating Intel CPUs with Nvidia AI accelerators and Nvidia graphics technology into Intel PC chips.
• Intel’s data center market share decreased from 70% in 2021 to 7% in the most recent quarter.

Nvidia on Monday completed a $5 billion purchase of Intel shares, paying $23.28 each. The purchase price was 36% below Intel stock’s Friday closing price. The deal was approved by the U.S. Federal Trade Commission earlier this month.

Intel shares have risen 45% since the deal was announced. In early trading on Monday, Intel shares fell 0.5% and Nvidia stock was down 1.5%.

The deal includes plans for Intel CPU chips to be paired with Nvidia’s industry-leading artificial intelligence accelerators in Nvidia AI servers, mirroring the role currently played by Nvidia’s own Grace CPUs and its upcoming Vera CPUs later this year. The companies also announced that Nvidia graphics technology will be integrated into Intel PC chips. Intel’s embedded graphics have long been a sore point for customers.

The share purchase provides Intel with much-needed capital as it tries to lift itself out of the hole dug over years, watching technology of competitors like Nvidia and Taiwan Semiconductor Manufacturing race ahead. In a two-way race with Nvidia, Intel held a 70% market share in data center equipment in 2021, a figure that has fallen to 7% in the most recent quarter.

Nvidia declined to comment on the progress of these projects, and Intel didn’t respond immediately to a Barron’s request.

Neither company has discussed whether Nvidia would use Intel’s struggling contract manufacturing for its chips. Taiwan Semi currently produces Nvidia’s chips.

Investors see the deal as a vote of confidence from the world’s most valuable company. This year, Intel has also received investments from the U.S. Department of Commerce, which replaced money Intel was due under the CHIPS Act, as well as another cash infusion from Softbank .

Write to Adam Levine at adam.levine@barrons.com