Nvidia, the global chip boss, actually spent $5 billion to invest in its old rival Intel!

Recently, the two companies announced that they will join forces to develop new chips for personal computers (PCs) and data centers. Intel will introduce NVIDIA's graphics processing technology in the next generation of PC chips and provide processor support for data center products built on NVIDIA hardware. This collaboration surprised the industry.

According to the agreement, Nvidia bought Intel shares at $23.28 per share, which is about 6.5% lower than the previous day's closing price, which is equivalent to "discounted shares". Although $5 billion was spent, due to Intel's large plate, Nvidia's final stake was less than 5%, which was only a financial investment and did not participate in control.

This "opponent turns into a partner" not only brings much-needed financial support to Intel, but also illustrates a general trend: under the wave of AI and high-performance computing, the former "enemy" has also had to join forces, and the pattern of the entire chip industry is changing drastically.

Intel soared 30%

As soon as the news came out, the market immediately "exploded". Intel's stock price soared 30% in pre-market trading, and investor confidence soared. Its competitor, AMD, "suffered", and its stock price plunged, falling more than 4% at one point, as everyone feared that it would be more passive in the competition.

This $5 billion investment is too timely for Intel.

In recent years, Intel has been losing ground in the competition for high-performance chips (especially AI and advanced processes) and has been left far behind by Nvidia. It is too expensive to engage in R&D by yourself, and the main business alone can no longer bear such a large investment. In order to "extend its life", Intel has been desperately "looking for money" for the past few months. received about 10% of the equity support from the U.S. government (equivalent to the state to save the field); received a strategic investment of US$2 billion from Japan's SoftBank; selling non-core assets to withdraw funds; Even former US President Donald Trump personally stood on the platform to help it attract investment.

Now, even the old rival Nvidia is here, which is equivalent to adding another "life-saving firewood". This money not only eased the financial pressure, but also sent a strong signal to the market: Intel is not out yet, and there is still a chance to make a comeback. The former chip overlord is trying to "recover blood", and the cooperation between this giant has also made the entire industry pattern more complex and interesting.

Intel produces CPUs, Nvidia produces GPUs, and money is made together

According to the latest agreement, NVIDIA and Intel will "join forces to build cores", focusing on two major directions: data center AI systems and PCs and notebooks equipped with NVIDIA graphics cards.

Cooperation 1: Create a new generation of AI servers

In the past, the core of computers and servers was the CPU (central processing unit), a market that has long been monopolized by Intel. But now, the AI era has changed - an AI server usually requires 1 CPU with 2 or even more NVIDIA GPUs (graphics cards) to run efficiently.

Although major customers such as Microsoft have begun to use Arm-based CPUs with NVIDIA GPUs (such as NVL72 systems), Nvidia has made it clear this time: We also want to support Intel!

Huang announced that Nvidia will purchase Intel's x86 CPUs, package them with their own GPUs and high-speed network technology, make them into "supercomputing nodes", and then integrate them into large AI cabinets to form a complete set of AI supercomputers.

To put it simply: in the future, the NVIDIA AI system you buy may contain Intel's brain!

Cooperation 2: NVIDIA graphics cards into Intel notebooks and PCs

In addition to servers, the two will also join forces on the consumer side. Intel will launch PC and notebook products with built-in NVIDIA GPUs. Nvidia's technology will be integrated into Intel's chip design. Huang said that this market is far from fully developed and has great potential - the target market size is as high as $50 billion!

Huang stressed that this cooperation will not affect the relationship between NVIDIA and Arm, and both sides will do it. Let's start with products and then say: This time it is mainly about product and technology integration, and does not involve Intel "foundry" (producing chips) for Nvidia. At present, Nvidia's chips are mainly manufactured by TSMC.

However, foundry cooperation is not ruled out in the future, and Nvidia said it will continue to evaluate Intel's foundry technology and wait and see for now. Intel's packaging technology should be used. Packaging is the last step in chip manufacturing, "packing" multiple chips into a module. This cooperation will use Intel's advanced packaging solutions.

Intel produces CPUs, Nvidia produces GPUs, and sells a complete set of AI solutions together. This is not only "making money together", but also a strategic huddle between the two giants in the face of the AI wave.

Jingtai Observation | This is a "high-level" strategic layout

To Nvidia: A coup to consolidate "AI hegemony". Nvidia doesn't want to make CPUs, and it doesn't have time to build its own x86 ecosystem, so instead of letting AMD dominate, it is better to pull Intel to "resurrect" and create a controllable competitor.

Purpose: Avoid all eggs in AMD's basket.

To Intel: life-saving money + technical endorsement. In recent years, it has fallen behind in advanced processes, high-performance chips cannot beat AMD, AI chips cannot beat Nvidia, R&D burns money, funds are tight, and it has relied on the US government's capital injection, SoftBank investment, and asset sales to continue its life. Now Nvidia's stake is not only $5 billion, but also a top "credit endorsement": "Even Nvidia is willing to cooperate, which shows that Intel is still saved." ”

For the industry: the three-legged tripod has become a "two strong alliances". Previously: Intel vs AMD vs NVIDIA, the Big Three scuffle. Now it becomes: NVIDIA + Intel vs AMD.

AMD is under pressure in an instant: PC market: NVIDIA + Intel join forces to fight Ryzen; Data center: NVIDIA's self-developed CPU (Grace) + Intel cooperation to squeeze AMD EPYC space.

Investment advice: three types of opportunities and risks

Short-term attention: Intel's "valuation repair" market. The current stock price is still at a low level, and 5 billion capital injection + NVIDIA cooperation has greatly alleviated capital and technical anxiety. There is a strong rebound momentum in the short term, but it is necessary to observe the landing of subsequent products.

Long-term layout: Nvidia's "ecological control" has been improved. Through "asset-light cooperation", Nvidia further controls the PC and data center ecology, and does not need to personally do the CPU, but it can affect the entire computing power architecture. NVIDIA is still the leader of the "shovel seller" in the AI era and continues to hold it.

Beware of risks: AMD's "pinching dilemma". If the NVIDIA+Intel cooperation is deepened, AMD will face pressure on both CPU and GPU lines, especially in the data center market, and customers may be more inclined to the "full NVIDIA ecosystem". Under short-term pressure, it is necessary to observe the progress of its MI300 series.