MW Why Nvidia's $5 billion Intel investment shakes Silicon Valley even more than its $100 billion OpenAI deal
By Daniel Newman
America needs a U.S. company producing the most advanced chips to safeguard its economic and national security
Nvidia's Intel stake sends a clear message to rivals and other countries.
Nvidia has taken charge of AI's development and direction.
Nvidia Corp. (NVDA) this week announced it would invest $100 billion into OpenAI as part of an ambitious partnership to construct data centers powered by the chip maker's AI processors.
Yet it's Nvidia's deal with Intel Corp. $(INTC)$ that is resonating loudest in Silicon Valley. This $5 billion investment, worth roughly 4% of the struggling chip maker, is far more than a straightforward financial transaction. It's a lifeline for Intel - and a calculated power play for Nvidia.
The Nvidia-Intel deal announced last week echoes Microsoft Corp.'s $(MSFT)$ $150 million investment in then-struggling Apple Inc. $(AAPL)$ in 1997, which helped engineer one of corporate America's greatest comebacks and strengthened the personal-computer industry. Similarly, Nvidia's investment in Intel instantly transforms the competitive dynamics of the semiconductor industry. In one stroke, Nvidia is sending an unmistakable message: It is orchestrating the future of artificial intelligence.
Strategic vision
If the U.S. government backs Intel, everything will fall into place for it.
For Nvidia and Intel, the timing couldn't be more strategic. With China's "ban" on advanced Nvidia chips creating supply-chain pressures and geopolitical tensions, this alliance strengthens both companies' positions in the global AI race. Nvidia gains diversified manufacturing capabilities and potentially reduces long-term dependence on Asian foundries, while Intel secures the validation and resources needed to revitalize its foundry operations.
As I've repeatedly said, if the U.S. government backs Intel, everything will fall into place for it.
The convergence of public and private support creates a compelling investment thesis. The U.S. government's recent 10% stake in Intel, combined with Nvidia's vote of confidence, positions the company as the cornerstone of America's semiconductor renaissance. As I've argued repeatedly over the past few years, America needs a U.S. company producing the most advanced chips on American soil to safeguard its economic and national security.
This isn't corporate welfare. It's national security insurance.
This isn't corporate welfare. It's national-security insurance. America's dependence on Taiwan Semiconductor Manufacturing Company Co. Ltd. $(TSM)$ creates a catastrophic single point of failure in our technological infrastructure. Building domestic semiconductor capabilities from scratch would require 10 to 20 years - time the U.S. cannot afford to lose in an increasingly competitive global landscape.
Intel's predicament had been particularly frustrating, given the perfect storm of favorable conditions the company was given. For a moment, it looked dire as President Donald Trump's praise and support for Intel came only after a brief, but pointed firestorm about the company, its woes, and its "conflicted" CEO.
However, the tide quickly turned as U.S.-China tensions, aggressive reshoring initiatives, substantial government investment and growing demand for domestic chip production created an ideal environment for Intel to serve as a key contributor to the Trump administration's ambitious AI and manufacturing agenda.
The collaboration may encourage other U.S. fabless companies to look closer at Intel and consider, even partially, to diversify risk from TSMC.
Intel's new relationship with Nvidia will start as a product and design partnership, but it may signal a broader realignment within the semiconductor ecosystem. The collaboration may encourage other U.S. fabless companies to look closer at Intel and consider, even partially, diversifying risk from TSMC, reducing the Taiwanese giant's asymmetric market power. For now, I expect Intel's foundry business to handle packaging for new Nvidia-Intel collaborative products, gaining crucial credibility and technical expertise.
The partnership also raises many questions about Nvidia's partners and competitors. The expected entry of Arm Holdings PLC $(ARM)$ into AI chips adds another layer of complexity. This deal also picks a clear x86 winner between Intel and Advanced Micro Devices Inc. $(AMD)$, and while AMD has seen its data center CPU business explode as AI infrastructure has grown, the new Nvidia-Intel partnership could provide a headwind for AMD.
Domino effect
The new competitive landscape will force other semiconductor companies to reconsider their strategic partnerships and manufacturing relationships.
The implications extend far beyond Nvidia and Intel. This alliance establishes new competitive dynamics that will force other semiconductor companies to reconsider their strategic partnerships and manufacturing relationships. The message to the industry is clear: Technological sovereignty and innovation capacity are now viewed as essential components of national security and economic competitiveness.
No single nation can secure technological dominance independently. Strategic alliances are becoming the decisive factor in the global technology race.
Nvidia's investment in Intel is a strategic validation of Intel's technology and could catalyze Intel's transformation into a credible foundry alternative. For investors who recognize the long-term implications of reshoring critical semiconductor manufacturing capabilities, this partnership offers a compelling opportunity to participate in America's technological independence.
The stars have finally aligned for Intel - backed by both government support and private-sector confidence. The question now is whether the company's leadership can execute on this opportunity to reclaim its position at the forefront of American semiconductor innovation.
Daniel Newman is CEO of the Futurum Group, which provides or has provided research, analysis, advising and/or consulting to ServiceNow, Intel, Nvidia, Microsoft, Amazon.com, IBM, AMD and other technology companies. Both Newman and Futurum Group have no positions in any of the companies cited. Follow him on X @danielnewmanUV.
Also read: Will Apple deliver Intel its next lifeline? Here's why analysts think a deal would make sense.
More: Intel must radically change how it does business - or Trump will do it for them
-Daniel Newman
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September 26, 2025 10:01 ET (14:01 GMT)
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