Intel, the veteran chipmaker, faced a sudden downturn as reports emerged of a setback in its collaboration with AI giant NVIDIA.

On Wednesday, Intel's stock plummeted in pre-market trading, with intraday losses exceeding 5%. The drop followed reports that NVIDIA had paused testing of Intel's 18A manufacturing process.

Just days earlier, the U.S. Federal Trade Commission (FTC) approved NVIDIA's $5 billion strategic investment in Intel. However, the news failed to provide any immediate boost to Intel's stock.

**Sharp Decline** On December 24, Reuters reported that despite Intel's momentum in securing partnerships, its manufacturing division continues to face challenges in producing high-quality chips independently. Two sources familiar with the matter revealed that NVIDIA recently tested Intel's 18A process for potential use in its own chips but has since halted further progress.

Following the report, Intel's shares tumbled in pre-market trading, hitting a low of $34.44 per share, down over 5%. By the time of reporting, losses remained above 3%.

An Intel spokesperson stated that the company's 18A manufacturing technology for advanced chips is "progressing well," while its next-generation 14A process continues to attract significant interest. The 14A process is expected to produce chips with higher performance and energy efficiency.

When NVIDIA invested $5 billion in Intel in September, it did not commit to using Intel's manufacturing services. At the time, Intel CEO Pat Gelsinger emphasized a focus on collaboration during the joint announcement with NVIDIA CEO Jensen Huang.

**Intel's Struggles and Recent Lifelines** As a chip giant with over 50 years of history, Intel has been losing market share and technological edge in recent years. In the AI race, it lags far behind NVIDIA, while in the CPU sector, it faces relentless competition from AMD. Its stock has also been on a downward trajectory.

A potential turnaround emerged in August when Intel announced an agreement with the U.S. government, which pledged to invest $8.9 billion in Intel's common stock, acquiring a 9.9% stake. The deal would make the U.S. government a major shareholder. Funding for the acquisition comes from $5.7 billion in previously allocated but unpaid subsidies under the CHIPS and Science Act, along with an additional $3.2 billion in government grants.

Experts suggest that Gelsinger's earlier meeting with former President Trump at the White House was a critical lifeline for Intel. A U.S. Commerce Department official noted that while the government's stake offers Intel a chance to succeed, it does not grant special privileges, emphasizing that Intel is not "too strategically important to fail."

In the same week as the White House deal, Intel secured a $2 billion investment from SoftBank Group. Intel stated that SoftBank's investment aligns with its long-term vision of advancing technologies to support digital transformation, cloud computing, and next-gen infrastructure for AI-driven change.

**NVIDIA's $5 Billion Bet** On December 18, the FTC formally approved NVIDIA's $5 billion strategic investment in Intel.

The deal, initially announced on September 18, 2025, involves NVIDIA purchasing newly issued Intel common stock at $23.28 per share, acquiring nearly 4% of Intel. The announcement sent Intel's stock soaring 23% that day.

Ipek Ozkardeskaya, a senior analyst at UBS, commented that Intel urgently needs a viable business model and customer interest in its products. NVIDIA's investment to jointly develop PC and data center chips is a significant development for Intel, which requires strong partners—especially as investors remain skeptical about its AI recovery. The deal also aligns with U.S. political goals to bolster domestic chip production, including Intel's planned Ohio facility, one of the world's largest chip factories.

**Strategic Implications** The collaboration extends beyond financial investment. In data centers, Intel will customize x86 CPUs for NVIDIA to integrate into AI infrastructure platforms. In personal computing, Intel will produce and supply x86 system-on-chip (SoC) solutions incorporating NVIDIA's RTX GPUs.

The partnership is seen as a "battle for standards," with the NVIDIA-Intel alliance poised to reshape the global semiconductor landscape. NVIDIA already dominates 85–95% of the data center GPU market, and deeper ties with Intel could further solidify its position. While the FTC approved the deal without restrictions, analysts speculate regulators may require open interface standards.

For Intel, the investment represents not just financial support but a technological revival opportunity. The joint x86+RTX SoC could be key to Intel's return to high-performance computing. Meanwhile, rivals like AMD and ARM face mounting pressure. While AMD leads in CPU performance, its integration with NVIDIA's ecosystem is limited. ARM's lack of a unified high-speed interconnect standard puts it at a disadvantage against the "NVLink+x86" combo.

The NVIDIA-Intel partnership is expected to accelerate next-gen AI chip development and reshape global semiconductor supply chains. However, concerns over antitrust implications persist, given NVIDIA's dominance in data center GPUs and the potential for further market consolidation.