Nvidia Invests $5 Billion in Intel to Co-Design Chips for PCs, Datacenters

A significant collaboration has been announced between two major tech entities, with one agreeing to utilize the other's graphic technology in upcoming PC chips. This partnership also involves the second entity incorporating some of the first's processors to satisfy the growing demand from AI data centers. The initiative appears to be a concerted effort in chip development, aligning with a broader push to strengthen the domestic chip supply chain. This collaboration follows a recent government investment, providing a 10% stake in one of the companies to repurpose existing act funds.

This strategic alliance is seen as a direct response to the increasing pressure for domestic manufacturing and a bid to counter foreign dominance in the semiconductor industry. Analysts are projecting a significant shift in revenue, with one company expected to surpass the other's annual earnings in a single quarter next year. The administration's involvement is notable, aiming to build domestic foundry capacity and ensure that these facilities are utilized, thereby fostering national champions in the chip sector.

The partnership also addresses concerns about technological competition, particularly with China, and the reliance on overseas manufacturing. There is a stated imperative to make chips within the United States and maintain a dominant player status. This move is viewed as crucial for national security, reducing dependence on foreign supply chains and countering the advancements of competitors.

• A significant collaboration has been formed between two companies, with Intel using Nvidia's graphic technology in its PC chips and Nvidia using Intel's processors for AI data centers.
• This partnership aligns with the administration's goal to bolster the domestic chip supply chain.
• The U.S. government recently took a 10% stake in one of the companies.
• A surprise $2 billion investment was made by Soft Bank last month.
• Analysts predict one company will generate more quarterly revenue than the other's annual revenue next year.

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Historic Collaboration Between Tech Giants [00:03]

• A major headline has emerged concerning a historic collaboration between two significant entities.
• One company will integrate the other's graphic technology into its forthcoming PC chips.
• In return, the other company will incorporate some of the first's processors.
• This integration is intended to address the escalating demand from AI data centers.
• The core idea is a joint effort in chip development.

A big headline. Quite the headline, John, for two companies that the US government has a vested interest in. In a statement, we heard from the Nvidia CEO Jensen Wong, who called this a historic collaboration.

This section introduces a landmark partnership where Intel will leverage Nvidia's graphics technology for its PC chips, while Nvidia will utilize Intel's processors to meet AI data center demands, signifying a joint push in chip development.

U.S. Government's Role and Domestic Chip Supply Chain [00:31]

• This collaboration follows a recent governmental push to strengthen the domestic chip supply chain.
• Last month, a deal was finalized that granted the U.S. government a 10% stake in one of the companies.
• This investment aims to repurpose existing funds from the Chips Act.
• Additionally, Soft Bank made a surprise $2 billion investment in one of the companies last month.
• These investments are occurring amidst mounting pressure for such financial commitments to secure trade deals.

Of course, last month, President Trump signing that deal that gave the US government a 10% stake in Intel in a bid to sort of repurpose some of the existing Chips Act money.

This part highlights the administration's active role in bolstering domestic chip production, including a significant stake acquisition and the influence of external investments, all geared towards strengthening the national chip industry.

Financial Projections and White House Ties [01:02]

• An important statistic indicates that by next year, one company is projected to earn more revenue per quarter than the other company achieves in an entire year.
• The current White House has notably strengthened its relationship with one of the companies.
• This company is now at the forefront of sensitive trade negotiations.

Analysts estimate that at some point next year, Nvidia will pull in more revenue per quarter than Intel gets in a year.

This section details the significant financial outlook for one of the involved companies and underscores its central role in crucial trade discussions, emphasizing the administration's close ties.

Presidential Objective and Foundry Capacity [01:26]

• The president's primary objective is to expand domestic foundry capacity.
• A crucial next step is ensuring that this capacity is utilized by companies.
• This partnership signifies that the companies are ready to use this capacity and collaborate.

What's his objective? Build out domestic foundry capacity one. What needs to happen after that? Someone needs to use it. And we've been talking about this over the last month. Who would be pushed to use it? This is not about the push anymore. Nvidia essentially is telling you they're ready to use it.

This segment focuses on the administration's strategic goal of increasing domestic chip manufacturing capabilities and ensuring that these facilities are actively used through such partnerships.

Partnership Details and Comparative Technology [01:44]

• The collaboration specifically targets certain chips for PCs and other devices.
• A key question is whether this effort will be substantial or largely symbolic.
• This mirrors previous discussions regarding the comparability of technology and the challenges of moving away from established manufacturers like TSMC in Taiwan for U.S. chip makers.

And specifically on certain chips for PCs and other devices. The question is whether this is going to be a big effort or whether this is going to be more uh performative.

This part delves into the specific applications of the partnership and raises questions about its potential scale and impact, particularly in relation to existing technological dependencies.

Market Reaction and Presidential Influence [02:08]

• Following the announcement, one company's stock saw an 18% increase in pre-market trading.
• The announcement is considered highly positive for the president.
• The president has exerted considerable pressure on companies, almost acting as a co-CEO for one of them.

Intel higher again up by 18% in the pre-market and Marie on the ground in the UK and Marie I imagine this announcement is music to the ears of the president.

This section covers the immediate market response and emphasizes the president's significant, almost hands-on, influence in driving these corporate collaborations.

Government Investment and National Champion Strategy [02:37]

• The U.S. government's decision to take a 10% stake in Intel, almost exactly a month prior, is recalled.
• The underlying question was who would either purchase chips from Intel or invest to help it regain its status as a national champion.
• The government's actions might be considered unconventional but are expected to lead to increased support for companies like Intel.

So on one front, you once again have what many would maybe call unconventional what the US government did, but certainly this is going to mean that more support could be flowing into the company like Intel.

This segment explains the government's strategic investment and its aim to foster domestic companies into national leaders in the semiconductor industry.

Competition with China and National Security Concerns [03:03]

• A core issue for the United States is highlighted by recent announcements from China.
• One company has outlined a multi-year plan to challenge the dominance of another in the market.
• There is a strong emphasis on manufacturing chips within the United States to ensure dominance and avoid losing ground to China.
• Current assessments indicate that China is not behind in AI technology and is directly competing.
• The necessity to produce chips in the U.S. and avoid reliance on Taiwan is stressed for national security reasons.

Huawei basically announced a multi-year plan to take on the dominance Nvidia has in the marketplace. Howard Lutnick, the commerce secretary, has said time and time again, "We have to make these chips in the United States. We have to make sure we are dominant player in this. We cannot lose to China." Jensen Wang told me himself he doesn't feel like China's behind. They're right up against them in terms of where they are in the market and an AI technology. The commerce secretary has said, "We have to make these chips in the US. We can't rely on Taiwan."

This part focuses on the geopolitical implications, emphasizing the need for U.S. self-sufficiency in chip manufacturing to counter competition from China and ensure national security by reducing reliance on foreign manufacturing hubs.