Intel shares were up more than 22% on news of its new partnership with Nvidia. The companies say it’s a product partnership, not a chipmaking agreement, thought it remains to be seen what it could mean for Taiwan’s TSMC.
00:00A surprise deal among former rivals. U.S. chip giants NVIDIA and Intel have announced a partnership.
00:06NVIDIA will invest $5 billion U.S. dollars into Intel, and the pair are working on new products for PCs and data centers.
00:14But the deal does not include any foundry agreements for manufacturing NVIDIA chips in Intel's chip factories.
00:20A lot of folks were expecting to see more foundry deals.
00:26You know, because, I mean, the big push has really been around manufacturing, and this is not a foundry deal.
00:31This is a product deal, which I think for Intel is fine because, frankly, their product business needs a lot of help, too.
00:38The new products include a system on chip for consumer PCs combining Intel's CPUs with NVIDIA's GPUs.
00:45NVIDIA will also buy Intel's CPUs for use in its data center rack systems.
00:50Investors were excited, with Intel's stock ending up more than 22% on Thursday.
00:56NVIDIA was also up nearly 3.5%.
00:58It's a big boost for Intel, which has struggled for years, but recently drew in lots of fresh money.
01:04That includes a stake from the U.S. government, which is pushing to expand high-tech manufacturing at home.
01:09Between the investments from Washington, Japanese conglomerate SoftBank, and now NVIDIA, Intel has seen about $16 billion in new investments in just the last month.
01:20But it also raises questions about NVIDIA's other partners, like Intel foundry rival TSMC, Taiwan's largest company.
01:28Both Intel and NVIDIA are TSMC customers, and NVIDIA is one of its largest.
01:33But the CEOs of both Intel and NVIDIA publicly praised TSMC and stressed there is no foundry agreement in this partnership.
01:41If I'm a TSMC investor, I think I shouldn't be worried too much on this.
01:47The broader trend is more sort of, I will pay close attention to its U.S. determination in pursuing U.S. semiconductor supply chain or advanced semiconductor manufacturing.
01:58I think on that front, it's very clear, and I think it's actually realized by many investors and people in the market.
02:05And despite the extra investment and U.S. government backing, Intel may still face challenges.
02:11U.S.-based semiconductor manufacturing and design is important.
02:16And there are very few companies that can do leading-edge manufacturing, and of the three, even in theory, Intel's the only one that's U.S.-based.
02:24Now, in terms of making them successful, the money doesn't really do that, right?
02:32Intel has to do that on their own.
02:34I think the jury is still out on that.
02:36The deal is a major one, but its impacts on the overall chip industry may not be seen for some time to come.
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