Introduction 

Nvidia has agreed to buy a $5 billion stake in Intel, taking a 4% stake in the company and launching a strategic partnership to co-develop chips for personal computers and data centres.  

The deal, which follows a recent U.S. government investment in Intel for 10% of the company, is designed to strengthen America’s position in the global semiconductor race and help Intel regain lost ground in advanced chipmaking.

Why This Deal Happened 

For Intel this deal is a lifeline as they have been under pressure for a long time now. Its manufacturing capacity has fallen behind, losing ground to Nvidia and AMD in the AI and GPU markets.  

Nvidia wants more control over its supply chain and wants deeper integration with CPU platforms to deliver more seamless, optimised chips. Partnering with Intel provides an opportunity for it to do that. 

There is also a geopolitical and policy dimension: the U.S. is eager to bring more chip manufacturing and innovation back home, reducing reliance on overseas fabs. This deal helps Intel gain credibility and scale, and offers Nvidia a stake in that resurgence.  

What are overseas fabs?

These are specialised factories where most chips are manufactured, many of which are located overseas in places such as Taiwan and South Korea. In the Nvidia case, they outsource this to the Taiwan Semiconductor Manufacturing Company (TSMC).  

Opportunities and Challenges  

This deal provides Intel with a substantial financial cushion. It opens doors for producing custom CPUs for Nvidia’s AI infrastructure, as well as x86 system-on-chips (SoCs) that embed Nvidia GPU chiplets for PCs. If integrated well, this will make Intel more competitive with AMD, especially in the PC + AI space. 

However, Nvidia has not yet committed to shifting its chip manufacturing to Intel’s foundries. Intel’s history with advanced nodes and fab yield has been mixed. Executing this at scale will be costly and technically challenging. There’s also the question of whether AMD or other rivals can counter with better performance or lower cost. Additionally, as both companies collaborate, regulatory scrutiny from the Department of Justice is likely to intensify.  

How Legal Teams Get Involved 

Fenwick & West advising Intel on this deal brings law firms and legal departments into action in multiple areas: 

  • M&A & Corporate Teams will handle the investment structure, disclosures, and negotiating terms, including risk allocation.
  • Competition & Antitrust Lawyers will assess regulatory approval requirements in the U.S. and possibly abroad to ensure the collaboration doesn’t violate laws regarding market dominance.
  • IP & Contracts Teams will manage the agreements for co-development, licensing of chip architecture and GPU/CPU integration.
  • Policy Lawyers will be vital given tensions between the U.S. and China over chip technology; parts of this deal could trigger export regulations or government oversight.

Future Outlook 

If successful, Intel could regain competitiveness against AMD in GPUs and CPUs, especially in markets that value US-based supply chains. Nvidia has a profound influence across the computing stack. However, if Intel fails to deliver fab performance, or if Nvidia does not move enough production over, then this could be seen as a last ditch patriotic save than anything else.