AI Development Partnership Boosts Intel by 23% Through Agreement with Nvidia
In a groundbreaking development, tech giants Nvidia and Intel have announced a partnership to develop custom x86 CPUs optimized for Nvidia's AI platforms. This collaboration, viewed very positively in DC according to Dan Ives, tech analyst at Wedbush Securities, is set to put pressure on AMD in both AI and PC markets.
The partnership promises to bring significant changes, with Intel planning to build system-on-chip designs incorporating Nvidia's RTX graphics technology for personal computers. This move is expected to result in faster, "smarter" computers for businesses and regular people.
Nvidia's dominance in the AI sector is further confirmed by its impressive Q2 2025 quarterly revenue of $46.7 billion, a 56% increase from the previous year. This growth has pushed the company's market value past $4 trillion, with Nvidia shares climbing 3% as a result.
The deal, however, requires regulatory approval, with the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) overseeing antitrust and business merger approvals. The Trump administration has already shown support for Intel, having invested $8.9 billion for a 10% stake in the company as part of efforts to secure domestic chip production amid tensions with China.
The investment will buy Nvidia roughly 215 million Intel shares at $23.28 each and will lead to a collaboration on custom chips for data centers and personal computers. Intel CEO Lip-Bu Tan framed the partnership as validation of Intel's core strengths.
Nvidia CEO Jensen Huang stated that the collaboration will "expand our ecosystems and lay the foundation for the next era of computing." However, neither company has disclosed a timeline for when the first jointly developed products would reach the market.
The collaboration is mutually beneficial, with Nvidia gaining deeper access to the x86 architecture and Intel leveraging Nvidia's AI dominance to stay relevant. Notably, the partnership comes amidst the Trump administration's efforts to limit exports of Nvidia chips to China, which resulted in China banning the use of Nvidia chips and promoting the use of domestic alternatives.
In a bid to secure domestic chip production, the Trump administration also threatened 100% tariffs on imported chips and negotiated export deals that allow Nvidia and AMD to sell lower-power AI chips to China in exchange for a 15% cut of sales.
Amidst these developments, Intel has announced plans to cut 25% of its workforce by year's end. This move, coupled with the Nvidia partnership, indicates a strategic shift in the tech industry, with companies focusing on innovation and collaboration to stay competitive.
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