Nvidia Corp. today disclosed that it has purchased $5 billion worth of Intel Corp. shares through a private placement.

The graphics card maker originally announced plans to make the investment in September. At the time, it stated that the deal involved about 214.7 million Intel shares, which corresponds to a 4.4% stake. Nvidia agreed to pay $23.28 per share, a 5% discount to the chipmaker’s closing price the day before the investment was announced.

The deal is part of a broader partnership that will also see the companies collaborate on multiple engineering initiatives. The first project will see Intel develop central processing units optimized to work with Nvidia Corp.’s graphics processing units. The effort centers on NVLink, an interconnect that the latter company ships with its chips.

Hardware makers often use a technology called PCIe to facilitate the movement of data between a server’s processors. The latest iteration of the technology, PCIe 5.0, can process up to 128 gigabits of traffic per second. Nvidia’s NVLink is capable of streaming up to 1.8 terabits per second, or more than 10 times more. Intel’s upcoming server CPUs will use the technology to exchange data with GPUs more quickly than would otherwise be possible.

The companies’ collaboration also extends to the consumer market. Intel plans to launch systems-on-chips that will include chiplets derived from Nvidia’s standalone desktop CPUs. A chiplet is a compact compute module integrated into a large processor.

At one point, Nvidia reportedly considered making some of its chips using Intel’s Intel 18A manufacturing process. The node represents one of the company’s largest fab upgrades in recent memory. It introduces a new transistor design and optimizations that mitigate power fluctuations inside chips, which can negatively impact performance if they’re not addressed.

Last week, Reuters reported that Nvidia had stopped a series of tests designed to determine whether Intel 18A could be used to make GPUs. The decision may have been related to the node’s sluggish rollout. Intel 18’s yield, a metric that tracks manufacturing quality, is only expected to reach industry-standard levels in 2027.

It’s believed that Apple Inc. has also been testing the process. Last month, prominent industry analyst Ming-chi Kuo stated that Intel’s chances of winning a foundry contract from the iPhone maker had recently “improved significantly.” The deal would see the chipmaker produce the M-series processors that power the iPad Pro and entry-level MacBook Air.

The report from Kuo sent Intel’s stock up more than 10%. That is one of the reasons the chipmaker is currently trading at a more than 50% premium to the price at which Nvidia purchased shares. According to a September report from Bloomberg, Apple could also make an investment in Intel as part of the companies’ chip collaboration. 

Photo: Nvidia