Dive Brief:
- Nvidia forged an alliance with Intel to develop custom AI PC and server processors, the companies said Thursday. The GPU giant will purchase $5 billion in Intel stock as part of the deal, according to the announcement.
- The partnership will create native integrations between Nvidia GPUs and Intel’s CPUs and x86 architecture to power AI compute. Intel agreed to build PC processors using Nvidia RTX GPU chiplets and produce data center CPUs that Nvidia will embed in its AI infrastructure platforms, the companies said.
- “This historic collaboration tightly couples Nvidia’s AI and accelerated computing stack with Intel’s CPUs and the vast x86 ecosystem — a fusion of two world-class platforms,” Nvidia CEO Jensen Huang said in the announcement. “Together, we will expand our ecosystems and lay the foundation for the next era of computing.”
Dive Insight:
Nvidia’s investment gives a timely boost to the once mighty CPU vendor, which has seen revenue growth decline sharply over the last year as its foundry business floundered.
Under CEO Lip-Bu Tan, who was appointed chief executive in March, the company embarked on an internal restructuring that reduced management layers by 50% and cut its workforce by 15%. Last month, Intel acceded to a Trump administration request to hand over a 10% share in the company in return for the remaining $5.7 billion in U.S. CHIPS and Science Act funding and $3.2 billion in Security Enclave grants awarded to the company by the Biden administration.
Intel lost its leading position in the semiconductor market last year, falling to third place behind Nvidia and Samsung Electronics, as cloud providers poured billions into AI data center hardware, according to Gartner. The CPU provider’s market share fell two percentage points from the prior year to 7.6% while Nvidia’s jumped to nearly 12%, driven by 120% revenue growth, the analyst firm found.
For Nvidia, Intel represents a pathway into the emerging AI PC market. The company is already leaning on partnerships with Acer, ASUS, Dell, HP, Lenovo and other leading hardware manufacturers to make inroads.
“There’s an entire segment of the market where the CPU and the GPU are integrated,” Huang said during a press conference Thursday. “That entire segment of the market is quite rich and it's really quite large and it's underserved today.”
Despite a shift to GPUs, Intel’s chips remain integral to enterprise compute for AI and traditional workloads, Gaurav Gupta, VP analyst at Gartner, said in an email.
“CPUs are an essential component of any server,” said Gupta, pointing to operating systems, general purpose coding and “everything from booting up the server to running diagnostic tools and handling security protocols.”
Nvidia’s interest in Intel stems from its enterprise ambitions and the crucial role its x86 architecture plays in powering AI compute.
“The CPU and its associated controllers handle data movement — they retrieve data from storage, process it and move it over high-speed networks to get it to the GPUs,” Gupta said.
The pact gives Intel an opportunity to recapture lost ground.
“Intel’s historic dominance and leadership is fading, and x86 architecture is being challenged at multiple fronts,” Gupta said. “Integrating with Nvidia could potentially give it the push needed to compete again.”
