Nvidia’s deal with Intel could put the struggling chipmaker’s next-generation manufacturing technology on a stronger footing, even without a direct commitment from the AI chip leader to use that technology to make its own chips, analysts said.

Nvidia on Thursday invested $5 billion in Intel for a stake of roughly 4%, and the two firms agreed to a deal to supply chips to one another to create “multiple generations” of joint products. Those products will connect Intel’s central processors and Nvidia’s artificial intelligence and graphics chips with a speedy and proprietary Nvidia connection technology called NVLink.

This could give Intel a leg up against rivals such as Advanced Micro Devices because its chips will be attached to Nvidia’s flagship products in a way that no other third-party chips currently are, analysts said. The joint products – in early stages of development and likely to be made on future manufacturing lines – could also provide an indirect boost to Intel’s 14A manufacturing process slated for 2027. Analysts have said this process is critical to its success, and Intel itself has warned it may not be able to pursue 14A if the company fails to get enough customer commitments to justify the expense of building it.

“Any relationship with Nvidia at this point, while not explicitly talking about the foundry services, should be seen as a possible extension of the partnership in the future,” Jack Gold, principal analyst with J.Gold Associates, said in a note, referring to Intel’s manufacturing arm.

Intel Foundry will supply central processors for the joint products and package chips from Nvidia for some of them, as part of the deal. Engineers from both companies will work together to turn Nvidia’s technology into a physical chip made at Intel.

This is significant for both because Intel does not always use its own factories to craft its own chip design, often relying on TSMC, just as Nvidia does.

But if Intel supplies the chips for the joint products and they prove to be popular, the partnership could help provide the production volumes that Intel needs to make its manufacturing investments viable, analysts said.

“It gives me a higher degree of confidence that 14A continues, at which point Intel should have very good returns” on its 14A investments, said Ben Bajarin, CEO of technology consulting firm Creative Strategies.

For Nvidia, the deal also means better access to a large swath of business and government customers with decades of software written for Intel’s chips. The primary loser is AMD, which designs different types of chips that compete with Nvidia and Intel in their respective markets, according to industry analyst Gold.

Investing.com — Nvidia’s decision to invest $5 billion in Intel and collaborate on next-generation chips marks a turning point for the U.S. semiconductor industry, according to Wedbush analysts.

The agreement, announced Thursday, will see Nvidia purchase Intel shares at $23.28 each while the two companies jointly develop custom data center and PC products.

“This is a game-changer deal for Intel as it now brings them front and center into the AI game,” Wedbush said, adding that recent developments amount to “a golden few weeks for Intel after years of pain and frustration for investors.”

The collaboration aims to combine Nvidia’s artificial intelligence and accelerated computing capabilities with Intel’s CPU technology and x86 ecosystem.

Wedbush explained that for data centers, Intel will build Nvidia-custom CPUs to be integrated into Nvidia’s AI infrastructure platforms. On the PC side, Intel will develop system-on-chips incorporating Nvidia’s RTX GPU chiplets to balance performance across CPUs and GPUs.

The firm said the move highlights the companies’ focus on “leveraging NVDA’s AI and accelerated computing stack with Intel’s CPUs and vast x86 ecosystems to lay the foundation for the next wave of computing with AI reinventing every layer of the computing stack.”

While no sales timeline has been provided, analysts noted the deal will not alter either company’s growth strategy, as both continue to benefit from surging demand for high-performance chips.

“With AI infrastructure investments continuing to grow … the chip landscape remains NVDA’s world with everybody else paying rent,” Wedbush said.

The firm added that the partnership also bolsters the U.S. lead in the “AI Arms Race against China,” with Intel shifting “from a laggard to a catalyst.”

Elsewhere, analysts at Baird described the move as a “historical collaboration,” adding that it is “powerful and incorporates longer-term positive implications for future joint-architecture developments that are mutually beneficial and will catalyze Intel’s AI exposure from a manufacturing, architecture, and market share standpoints.”