Nvidia has agreed to invest $5bn in its strug­gling rival Intel as part of a deal to develop chips for PCs and data centres, the latest reorder­ing of the tech industry spurred by arti­fi­cial intel­li­gence.

Intel shares were up more than 22 per cent by yes­ter­day after­noon after the announce­ment, which unites two of Sil­icon Val­ley’s longest-run­ning rivals.

The deal comes a month after the US gov­ern­ment agreed to take a 10 per cent stake in Intel, as Don­ald Trump’s admin­is­tra­tion tries to secure the future of Amer­ican chip man­u­fac­tur­ing.

But the pair’s announce­ment makes no ref­er­ence to Nvidia using Intel’s foundry to pro­duce its chips. Intel’s man­u­fac­tur­ing busi­ness, which is los­ing bil­lions of dol­lars a year and strug­gling to secure external cus­tom­ers, is seen as vital to US tech­no­lo­gical sov­er­eignty.

Intel, which has also largely failed to gain a foothold in the boom­ing AI server mar­ket, lost its crown as the most valu­able chip­maker to Nvidia in 2020.