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In a major collaboration that would have been hard to imagine just a few years ago, Nvidia announced today that it was buying a total of $5 billion in Intel stock, giving Intel’s competitor ownership of roughly 4 percent of the company. In addition to the investment, the two companies said that they would be co-developing “multiple generations of custom data center and PC products.”

“The companies will focus on seamlessly connecting NVIDIA and Intel architectures using NVIDIA NVLink,” reads Nvidia’s press release, “integrating the strengths of NVIDIA’s AI and accelerated computing with Intel’s leading CPU technologies and x86 ecosystem to deliver cutting-edge solutions for customers.”

Rather than combining the two companies’ technologies, the data center chips will apparently be custom x86 chips that Intel builds to Nvidia’s specifications. Nvidia will “integrate [the CPUs] into its AI infrastructure platforms and offer [them] to the market.”

On the consumer side, Intel plans to build x86 SoCs that integrate both Intel CPUs and Nvidia RTX GPU chiplets—Intel’s current products use graphics chiplets based on its own Arc products. More tightly integrated chips could make for smaller gaming laptops, and could give Nvidia a way to get into handheld gaming PCs like the Steam Deck or ROG Xbox Ally.

It takes a while to design, test, and mass-produce new processor designs, so it will likely be a couple of years before we see any of the fruits of this collaboration. But even the announcement highlights just how far the balance of power between the two companies has shifted in the last few years.

A dramatic reversal

Back in 2005, Intel considered buying Nvidia outright for “as much as $20 billion,” according to The New York Times. At the time, Nvidia was known almost exclusively for its GeForce consumer graphics chips, and Intel was nearing the launch of its Core and Core 2 chips, which would manage to win Apple’s business and set it up for a decade of near-total dominance in consumer PCs and servers.

But in recent years, Nvidia’s income and market capitalization have soared on the strength of its data center chips, which have powered most of the AI features that tech companies have been racing to build into their products for years now. And Intel’s recent struggles are well-documented—it has struggled for years now to improve its chip manufacturing capabilities at the same pace as competitors like TSMC, and a yearslong effort to convince other chip designers to use Intel’s factories to build their chips has yielded one ousted CEO and not much else.

The two companies’ announcement comes one day after China banned the sale of Nvidia’s AI chips, including products that Nvidia had designed specifically for China to get around US-imposed performance-based export controls. China is pushing domestic chipmakers like Huawei and Cambricon to put out their own AI accelerators to compete with Nvidia’s.

Correlation isn’t causation, and it’s unlikely that Intel and Nvidia could have thrown together a $5 billion deal and product collaboration in the space of less than 24 hours. But Nvidia could be looking to prop up US-based chip manufacturing as a counterweight to China’s actions.

There are domestic political considerations for Nvidia, too. The Trump administration announced plans to take a 10 percent stake in Intel last month, and Nvidia CEO Jensen Huang has worked to curry favor with the Trump administration by making appearances at $1 million-per-plate dinners at Trump’s Mar-a-Lago golf course and promising to invest billions in US-based data centers.

Although the US government’s investment in Intel hasn’t gotten it seats on the company’s board, the investment comes with possible significant downsides for Intel, including disruptions to the company’s business outside the US and limiting its eligibility for future government grants. Trump and his administration could also decide to alter the deal for any or no reason—Trump was calling for Tan’s resignation for alleged Chinese Communist Party ties just days before deciding to invest in the company instead. Investing in a sometime-competitor may be a small price for Nvidia and Huang to pay if it means avoiding the administration’s ire.

Outstanding questions abound

Combining Intel CPUs and Nvidia GPUs makes a lot of sense, for certain kinds of products—the two companies’ chips already coexist in millions of gaming desktops and laptops. Being able to make custom SoCs that combine Intel’s and Nvidia’s technology could make for smaller and more power-efficient gaming PCs. It could also provide a counterbalance to AMD, whose willingness to build semi-custom x86-based SoCs has earned the company most of the emerging market for Steam Deck-esque handheld gaming PCs, plus multiple generations of PlayStation and Xbox console hardware.

But there are more than a few places where Intel’s and Nvidia’s products compete, and at this early date, it’s unclear what will happen to the areas of overlap.

For example, Intel has been developing its own graphics products for decades—historically, these have mostly been lower-performance integrated GPUs whose only job is to connect to a couple of monitors and encode and decode video, but more recent Arc-branded dedicated graphics cards and integrated GPUs have been more of a direct challenge to some of Nvidia’s lower-end products.

Intel told Ars that the company “will continue to have GPU product offerings,” which means that it will likely continue developing Arc and its underlying Intel Xe GPU architecture. But that could mean that Intel will focus on low-end, low-power GPUs and leave higher-end products to Nvidia. Intel has been happy to discard money-losing side projects in recent years, and dedicated Arc GPUs have struggled to make much of a dent in the GPU market.

On the software side, Intel has been pushing its own oneAPI graphics compute stack as an alternative to Nvidia’s CUDA and AMD’s ROCm, and has provided code to help migrate CUDA projects to oneAPI. And there’s a whole range of plausible outcomes here: Nvidia allowing Intel GPUs to run CUDA code, either directly or through some kind of translation layer; Nvidia contributing to oneAPI, which is an open source platform; or oneAPI fading away entirely.

On Nvidia’s side, we’ve already mentioned that the company offers some Arm-based CPUs—these are available in the Project DIGITS AI computer, Nvidia’s automotive products, or the Nintendo Switch and Switch 2. But rumors have indicated for some time now that Nvidia is working with MediaTek to create Arm-based chips for Windows PCs, which would compete not just with Intel and AMD’s x86 chips but also Qualcomm’s Snapdragon X-series processors. Will Nvidia continue to push forward on this project, or will it leave this as-yet-unannounced chip unannounced, to shore up its new investment in the x86 instruction set?

Finally, there’s the question of where these chips will be built. Nvidia’s current chips are manufactured mostly at TSMC, though it has used Samsung’s factories as recently as the RTX 3000 series. Intel also uses TSMC to build some chips, including its current top-end laptop and desktop processors, but it uses its own factories to build its server chips, and plans to bring its next-generation consumer chips back in-house.

Will Nvidia start to manufacture some of its chips on Intel’s 18A manufacturing process, or another process on Intel’s roadmap? Will the combined Intel and Nvidia chips be manufactured by Intel, or will they be built externally at TSMC, or using some combination of the two? (Nvidia has already said that Intel’s SoCs will integrate Nvidia GPU chiplets, so it’s likely that Intel will continue using its Foveros packaging technology to combine multiple bits of silicon into a single chip.)

A vote of confidence from Nvidia would be a big shot in the arm for Intel’s foundry, which has reportedly struggled to find major customers—but it’s hard to see Nvidia doing it if Intel’s manufacturing processes can’t compete with TSMC’s on performance or power consumption, or if Intel can’t manufacture chips in the volumes that Nvidia would need.

We’ve posed all of these questions to both Intel and Nvidia. This early, it’s unlikely that either company wants to commit to any plans other than the broad, vague collaborations that were part of this morning’s announcement. But we’ll update this article if we can shake any other details loose. Both Nvidia and Intel CEOs Huang and Tan will also be giving a joint press conference at 1 pm ET today, where they may discuss the answers to these and other questions.