Nvidia's $5 billion Intel investment will have long-term implications for enterprise data center and networking products. Credit: Gorodenkoff / Shutterstock It’s hard to overstate the significance of the alliance struck between Intel and Nvidia recently. Nvidia is dipping into its $56 billion bank account to acquire a 5% stake in Intel for $5 billion, making it the second-largest shareholder of Intel stock after the federal government’s recent investment. It does not get a place on Intel’s board of directors, nor does it have any say-so over Intel’s operations and strategy. The deal is simply a stock purchase to provide investment in the company, and the investment is for the products division, not the foundry business. Most significantly, the deal provides Nvidia greater access to the x86 ecosystem, which is important for the enterprise data center market, and it gives Intel access to GPUs that are in demand and an opportunity to move its CPU products. Technologically, it brings the two companies much closer together – about as close as two companies can get short of a merger, which analysts don’t believe will happen. [ Related: More Nvidia news and insights ] “No, I don’t think that’s the path. But it could be during this administration, if there were a time and place,” said Anshel Sag, principal analyst with Moor Insights & Strategy. Alvin Nguyen, senior analyst with Forrester Research, doesn’t believe a merger is imminent either. “Aside from regulatory hurdles and the currently complex geopolitics, I think this is a safe investment and partnership to get them some PR, greater access to the x86 market, and provide their GPU technology to be included in APUs and SoCs that can reach markets they are not established in.” In announcing the deal, Nvidia CEO Jensen Huang emphasized the client aspect of the deal, saying future Intel chips would have Nvidia GPUs baked into them instead of Intel’s own GPU technology. The server business will be impacted, as well. One thing the analysts agree on: AMD is a loser in this deal. AMD had the advantage of offering a CPU and GPU combination that Intel and Nvidia didn’t have individually. The appeal of that can be seen in supercomputers like Frontier and El Capitan, which are all-AMD designs of CPUs and GPUs working in tandem. Now, the two companies are allied and will have a competitive offering in due time. A second area of agreement is that the future of Jaguar Shores – Intel’s AI accelerator based on its GPU technology and the Gaudi AI accelerator – is uncertain. “Nvidia already has solutions here, and it doesn’t make sense for Intel to work on a redundant product that needs to be marketed over an established one,” said Nguyen. A significant outcome from this deal is that Intel is adopting the Nvidia’s proprietary NVlink high-speed interconnect protocols. “This means that Intel has essentially determined its ability to compete head-to-head with Nvidia in the current large-scale AI marketplace, despite its best efforts, have mostly failed,” wrote Jack Gold of J. Gold Associates in a research note. Gold notes that Nvidia already uses a few Xeon data center chips to power its largest systems, and the x86 chips provide most of the controls and pre-processing that its large-scale GPU racks require. By accelerating the performance of the Xeon, the GPU benefits as well. That leaves a question mark hanging over Nvidia’s Arm CPUs, which is likely to continue for “niche areas,” Gold wrote. “But with this announcement, it now seems to admit that working with an established player like Intel is a better long-term bet for CPUs.” So will Nvidia will continue its efforts in the Arm space, knowing that it has direct access to beefy x86 technology? Sag said Nvidia’s Arm efforts will continue. “Nvidia has made it abundantly clear that Arm is moving forward as planned, especially since Nvidia is still building Arm for its own CPUs,” he said. Such a deal as this seemed impossible 15 to 20 years ago; the acrimony between the two companies was too much. But today, Nvidia’s Huang is buddies with Intel’s latest CEO, Lip-Bu Tan. And why not? After all, Nvidia came out on top in this deal. “Sometimes enemies become best of friends when there is money to be made,” said Gold. More Intel news: Intel touts efficiency and performance in new 288-core Xeon processor Intel warns US govt equity stake could disrupt its global business and strategic deals As US takes 10% stake in Intel, new questions arise for enterprise buyers More Nvidia news: Nvidia reportedly acquires Enfabrica CEO and chip technology license Nvidia rolls out new GPUs for AI inferencing, large workloads Nvidia networking roadmap: Ethernet, InfiniBand, co-packaged optics will shape data center of the future SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below.