AMD will acquire Nvidia in a deal valued at about $1 billion, according to people familiar with the matter.
Nvidia, which is based in Irvine, California, has been exploring the acquisition of chip companies in recent years, including ARM, Samsung and Qualcomm.
It has been looking for partners to build chips for VR, which will be an increasingly popular industry in the future.AMD has been focusing on the smartphone market, with a focus on phones and tablets, for years.
It launched the Radeon Pro series in 2017, which was a huge success, but it was never able to get enough traction to catch up with Nvidia.
The company is also trying to launch a high-end graphics solution.