Nvidia has completed its purchase of Intel shares worth about USD 5 billion (Rs 44,955 crore), a deal that was first announced in September, according
to a regulatory filing, Reuters reported. The leading artificial intelligence chipmaker agreed to buy Intel’s common stock at USD 23.28 (Rs 2,093.10) per share. The investment is seen as an important financial support for Intel, which has faced difficulties in recent years after business mistakes and heavy spending on expanding its chip manufacturing capacity hurt its finances, Reuters said. According to the filing made on Monday, Nvidia bought more than 214.7 million Intel shares through a private placement at the price agreed in September, Reuters reported. US antitrust regulators have already approved the transaction. A notice posted earlier this month by the US Federal Trade Commission confirmed that the agencies had cleared Nvidia’s investment in Intel, Reuters said.
Impact on competitors
The deal could create challenges for other chipmakers. Taiwan Semiconductor Manufacturing Company currently makes Nvidia’s most important processors. Analysts say Nvidia could, in the future, shift some of this work to Intel, which may pose a risk to TSMC’s business, Reuters reported.Advanced Micro Devices (AMD), which competes with Intel in supplying chips for data centres, could also be affected by Nvidia’s support for Intel.
An AMD spokesperson said the company would continue to deliver high-performance products and grow its market share with its focus on artificial intelligence, Reuters said.
David Wagner, portfolio manager at Aptus Capital Advisors, told Reuters that AMD has been gaining market share in desktops and laptops for some time. However, he said TSMC may face bigger risks in the long run if Nvidia reduces its dependence on the Taiwanese chipmaker.
Technology partnership
The agreement also includes a technology partnership. Intel will design custom data-centre central processors that Nvidia plans to package with its AI chips, known as GPUs. Nvidia will use its own technology to allow the Intel and Nvidia chips to communicate at much higher speeds, Reuters reported.Fast chip connections are very important in the AI market because many chips need to work together to process large amounts of data. At present, Nvidia’s top AI servers use only Nvidia chips. This deal could allow Intel to earn revenue from each Nvidia server, Reuters said.
The combined Nvidia-Intel chips could also compete with Broadcom, which develops chip connection technology and works with companies such as Google on AI chips. Broadcom did not respond to a request for comment, Reuters reported.
(1 USD = Rs 89.91)
(From Reuters Inputs)
