Nvidia’s $5 billion Intel stock purchase is already worth $7.58 billion, turning the recently approved bailout of its rival into a shrewd financial play.
Nvidia had locked in a purchase price of $23.28 per share for Intel when Nvidia CEO Jensen Huang and Intel CEO Lip-Bu Tan struck a deal in September.
The deal had been under scrutiny by the U.S. Federal Trade Commission, which was examining whether Nvidia’s potential 4 percent ownership stake could run afoul of antitrust laws.
However, the FTC gave the deal a greenlight on Dec. 18.
The purchase of 214 million shares closed on Dec. 26, according to Intel regulatory filings. Intel shares closed Monday at $36.68.
Under the terms of the deal, Nvidia and Intel will jointly develop “multiple generations” of chips for datacenter and PC in a move to capture share across the entire chip customer base from consumer to hyperscale customers.
The two companies will work on connecting their chips via the incredibly fast NVLink, which reaches 1.8 TB/s of bandwidth (900 GB/s in each direction) per GPU – about 14x the bandwidth of a PCIe 5.0 x16 slot.
In the PC arena, Intel will build Nvidia-custom x86 CPUs that Nvidia will integrate into its AI infrastructure platforms and offer to the market.
Intel will also be able to build x86 systems-on-chips (SOCs) that integrate Nvidia RTX GPU chiplets. These new x86 RTX chips will power PCs that contain integrated CPUs and GPUs.
The agreement between Intel and Nvidia to develop chips for the data center and for the PC is similar to one that ran afoul of regulators in 2021 when Nvidia attempted to buy UK-based chipmaker Arm outright for $40 billion.
At the time, the FTC said such a deal would have given a large chipmaker control over one of its rivals and amounted to the largest semiconductor deal ever attempted.
The FTC sued. Nvidia abandoned the deal two months after the lawsuit was filed. Then FTC chairman Lina Khan noted it was a rare out-of-court win for the agency during US Senate testimony.
“The proposed merger would have given one of the largest chip companies control over its rivals’ designs for competing chips,” she told United States Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights in September 2022. “By doing so, the FTC’s complaint alleged that the combined firm would have had the means and incentive to stifle next-generation technologies, including those used to run datacenters and driver-assistance systems in cars.”
Khan, an appointee of former US President Joe Biden, is no longer with the agency. Nvidia has a long-standing relationship with both Arm and Arm-based SoC designers. Prior to its 72-core Grace CPUs, Nvidia worked with Arm on its Tegra family of chips, which power consoles like Nintendo Switch. And as we previously reported, Nvidia has extended similar support for its NVLink tech to Qualcomm and Fujitsu. ®