Nvidia invests $5 billion in Intel as rivals forge surprise AI alliance

It was a Thursday before dawn in Silicon Valley when Intel CEO Lip-Bu Tan found himself under attack by the president of the United States.

“The CEO of INTEL is highly CONFLICTED and must resign, immediately,” US President Donald Trump wrote on his Truth Social platform at 4:39 AM Pacific Time on August 7. Before he was Intel CEO, Tan had been a prolific investor in companies in China.

Trump and Tan had not met. While technology leaders from Nvidia, AMD, OpenAI, Amazon, Google and Palantir had all recently traveled to see Trump, the head of America’s most storied chipmaker had not spent time with the president since joining Intel (INTC.O) in March.

Politics was not Tan’s top priority. It had been more than 20 years since Tan, 66, had donated to a presidential election campaign. Though he spoke with a handful of US government leaders, including Commerce Secretary Howard Lutnick in April, the Intel CEO did not fill the company’s top policy job in Washington for months after its prior holder, a Democrat, resigned.

Almost immediately after Trump’s attack, Intel scrambled to lock down time with the president, two people with knowledge of the situation said. That culminated in the most pivotal, roughly 40-minute meeting of Tan’s decades-long career.

Previously unreported details about Tan and Intel show how a man Trump had accused of supporting China’s interests came away from the meeting with a commitment from the US government to invest billions of dollars for a nearly 10 per cent stake in the company.

The deal gave Intel a too-strategic-to-fail aura and opened doors to potential partners who might want to win the president’s favor. It also may pave the way for the government to take more equity stakes in businesses the administration deems strategic, in what some investors previously described to Reuters as ushering in a new era of US industrial policy.

Intel’s share price has risen around 80 per cent since Tan’s appointment, outpacing the percentage gains of the S&P 500 and Nvidia (NVDA.O) in that time.

Reuters spoke with around 20 people who are current and former Intel employees, government advisers, and Tan’s industry contacts. Some of them questioned whether Tan has the technical acumen to restore Intel’s lead in chip manufacturing and find a winning artificial intelligence strategy, even as his skills as a dealmaker served him well in the Oval Office and elsewhere.

Though Intel’s chips powered some of the first mass-produced PCs, years of dysfunction had allowed foreign competitors such as TSMC to eclipse Intel in high-end chip production.

In statements, an Intel spokesperson said Tan needed no persuading to engage with the Trump administration. Early on, he elevated government affairs, among other functions, to report to him. Intel announced in December that a Trump economic adviser would helm the unit.

“Lip-Bu Tan has a long, and well-established history of engagement in Washington, both before and after joining Intel,” the spokesperson said. Intel declined to make Tan available for an interview.

A White House spokesperson said President Trump was using his executive power to get “the best bargain for the American taxpayer” and safeguard US security.

“The Administration’s historic deal with Intel is one of many initiatives to reshore semiconductor and other critical manufacturing back to the United States,” the White House spokesperson said.

40 MINUTES IN THE OVAL OFFICE

Before heading into the White House, Tan called on his own allies who had forged relationships with the president, including Microsoft CEO Satya Nadella and Nvidia CEO Jensen Huang, to vouch for him, said two people familiar with the discussions.

Tan “spoke, as he does often, with confidantes who would have relevant insight and perspective ahead of his meeting with President Trump,” the Intel spokesperson said. Nvidia and Microsoft did not comment for this story.

Prior to the meeting, Tan strategized with his advisors on how to convince Trump he was an American patriot by discussing his personal story and his commitment to the United States, the two people said. He also prepared to discuss his China holdings, the people said.

Tan has made some 600 investments in China, some linked to the country’s military, according to Reuters reporting. Those connections to China are what ultimately landed him in the crosshairs of the president. Two of Tan’s investment firms — Walden International and Walden Catalyst — did not answer requests for comment. A third, Celesta Capital, said it had made one China investment that it exited in 2020.

His dealmaking acumen, Celesta Capital said, is a key reason Tan “is so well suited to lead Intel’s current moment.”

Just two cabinet members joined the meeting between Trump and Tan in the Oval Office: Lutnick and Treasury Secretary Scott Bessent, one of the people said. Trump questioned the Intel CEO about how he planned to turn the company around, the person said.

Tan had already told Lutnick in a prior meeting that he did not want billions in handouts that the US owed Intel as part of the CHIPS Act, the Commerce Secretary said in a video on X in August. Neither Lutnick nor Tan said why. The grant money had been offered to companies under the 2022 CHIPS Act in exchange for reviving domestic manufacturing so the US could reduce its reliance on foreign semiconductor production.

The administration of former President Joe Biden had announced dozens of these awards to various chip-related companies.

So when Trump proposed that the US receive equity in exchange for giving Intel more CHIPS Act money – an idea that two sources said Lutnick had talked about for weeks with government staff – Tan struck a deal. Intel declined to comment on the specifics of the private conversation, but Lutnick later said in the video that equity made the exchange “fair.”

The deal gave Intel a $5.7 billion cash infusion and set up the US government to be its largest shareholder. After the initial meeting, Tan pledged to “make Intel great again” in the video that Lutnick posted on social media, with the caption, “The Art of the Deal: Intel.”

Within weeks of his White House coup, Tan finalized a partnership with Nvidia, securing $5 billion from its CEO Huang who called Tan his “long-time friend.” Unlike Intel, known for manufacturing chips called central processing units, Nvidia designs the world’s top chips for AI.

Trump celebrated the deal on social media, posting an AI-generated image of himself staring at a chart of Intel’s stock and showing how the value of the US stake had risen by 50 per cent after Nvidia’s investment.

INTEL’S VENTURE CAPITALIST CEO

Born in Malaysia to a Chinese-language journalist and a teacher, Tan started out in the hard sciences and had plans to become a nuclear engineer, but he ultimately went to business school and in or around 1983 got his first job in venture capital in California.

During his career, Tan established himself as a man with a golden touch with startups that successfully were sold to other companies or went public. He amassed an estimated personal fortune well above $500 million.

Tan’s dealmaking savvy is helping Intel only to a point, three people with knowledge of the company said. For instance, Tan’s bid to buy SambaNova was the subject of internal debate given how the startup makes application-specific AI chips while the market favored general-purpose ones.

Additionally, these people said, chipmaking requires more engineering expertise than a typical tech business. Factories that make advanced chips rely on tools so precise they could pinpoint a US quarter-dollar coin as far away as the moon. Some of its most successful executives, like Nvidia’s Huang, are electrical engineers by training.

Still, some Wall Street analysts say Tan is an excellent choice for Intel CEO, with decades of chip-industry experience and a track record of delivering returns to shareholders.

“Lip-Bu is deeply involved in technical decisions, including product roadmaps,” the Intel spokesperson said. “These are technical, hands-on changes that highlight the depth of his technical leadership.”

Tan was also “keenly aware” of Intel’s challenges when he took the CEO job, the Intel spokesperson said, because he had served on its board from 2022 until 2024.

But once inside Intel – which had around 100,000 staff when he joined – the complexity of the chip manufacturer was unlike anything Tan had faced as a CEO before, said two of the sources, who worked at Intel.

The company was bleeding cash to build factories for chip manufacturing, an effort begun under his predecessor Pat Gelsinger , and it needed an estimated $20 billion or more to have a shot at winning customers.

Tan called on top executives in his network and asked how they did things, one of the sources said. He likewise called on big customers – cloud providers like Amazon and Google – and asked what they wanted, said two people familiar with the matter.

Tan shook up Intel’s management team, similar to when he led the chip design company Cadence. There, he had worked with a deputy to draft a list of executives to fire, a person familiar with his Cadence days said. Cadence declined to comment.

Tan is cutting deeper still: laying off around 15 per cent of Intel employees per securities filings, many of them managers.

He bypassed middle managers to have technical talent brief him directly, two of the people said. Tan named Intel engineering veteran Pushkar Ranade as his chief of staff and in December elevated him to interim chief technology officer.

Despite the intensity of his task at Intel, Tan has split his time with his myriad other commitments, which include his investment firms. When evaluating potential deals for Intel’s venture arm, Tan would also ask his investment firms for their opinion, one of the former Intel employees said.

An alleged conflict of interest with his venture portfolio prompted Intel’s board to push back on Tan over an acquisition this year, Reuters reported this month.

His Intel employment requires that he spend “such time as is necessary” to perform his duties as CEO, a change from the prior Intel chief’s contract that had required “full business efforts and time to Intel.”

Celesta Capital said Tan’s time commitment to the firm is now minimal, and its team has received no request to review deals for Intel Capital. Walden International and Walden Catalyst did not answer requests for comment.

Intel said Tan is working daily on transforming the company and “acted decisively” to flatten its structure, adding he is a “highly engaged CEO” who is “helping to restore speed, accountability, and create an engineering-centric, customer-focused culture.”

A ‘LIFELINE’ FOR INTEL

So far, the US investment has been a catalyst for Intel. Its Corporate Vice President John Pitzer said in a September interview that President Trump had just hosted top technology CEOs for dinner to discuss AI, and that their companies were potential Intel customers.

The deal was a “lifeline” for Intel, said technology lobbyist and Chamber of Progress CEO Adam Kovacevich. Without it, Intel could have been out a CEO if it had succumbed to Trump’s pressure, he said.

The same week as the White House deal, Intel announced a $2 billion investment from Masayoshi Son’s SoftBank, where Tan once was a board member.

Lutnick, who previously had no vested interest in phone calls to his office from business or government leaders about Intel’s manufacturing, now has an incentive to jump at them, said one of the sources, who is familiar with the administration. Lutnick has indicated that Americans have skin in the game for Intel to land a foundry deal that could bolster US chip production, the person said.

Foreign chip manufacturers operating in the US are concerned that government officials will tip the scales for customers to manufacture with Intel instead of with them, according to two sources familiar with these worries.

A Commerce Department official said the US stake gives Intel a shot at success but not a leg up, and Intel is not “too strategic to fail.” The official said further that Secretary Lutnick talks to all parties rather than prioritizing calls for Intel’s sake.

While Intel is picking up steam on the deals front, its manufacturing unit has struggled to produce quality in-house chips.

Nvidia recently tested out whether it would manufacture its chips using Intel’s production process known as 18A but stopped moving forward, two people familiar with the matter said. Nvidia did not answer a request for comment.

An Intel spokesperson said the company’s 18A manufacturing technologies that make advanced chips are “progressing well,” and it “continues to see strong interest” for its next-generation production process, called 14A, which is expected to produce chips that are more powerful and efficient.

Intel shares fell 3.6 per cent before paring losses after Reuters published this report.

Nvidia made no commitment to manufacture with Intel in September when investing $5 billion in the chipmaker. “Right now we are focused on collaborations,” Tan told reporters while announcing the deal with Nvidia’s Huang.