Intel’s AI Challenges Leave a comment
For Intel‘s AI Challenges, once the leader of the US chip industry, the AI era has brought significant challenges. Seven years ago, Intel had a chance to invest in OpenAI, a new non-profit focused on generative artificial intelligence. At that time, generative AI was relatively unknown. During 2017 and 2018, Intel and OpenAI executives explored various options. Intel considered buying a 15% stake for $1 billion in cash. They also discussed an additional 15% stake if Intel provided hardware at cost. Ultimately, Intel decided against the deal. Then-CEO Bob Swan doubted that generative AI models would be market-ready soon enough to justify the investment.
Intel’s Decision:
Intel’s decision not to invest in OpenAI—a company that released ChatGPT in 2022 and is now valued at $80 billion—has remained undisclosed until now. This missed opportunity is part of Intel’s broader struggle. Once a pioneer in computer chips during the 1990s and 2000s, Intel now faces difficulties in the AI sector.
Recently, Intel’s second-quarter results caused its stock to drop more than 25%, marking its worst trading day since 1974. For the first time in 30 years, Intel’s market value fell below $100 billion. The company, once known for its “Intel Inside” slogan, still struggles to launch a successful AI chip. In contrast, Nvidia, valued at $2.6 trillion, has successfully transitioned from video game graphics to AI chips needed for large generative AI systems, such as OpenAI’s GPT-4 and Meta Platforms’ Llama models. Intel also trails behind AMD, which is valued at $218 billion.
Intel’s spokesperson pointed to recent comments by CEO Pat Gelsinger about their AI progress. Gelsinger claimed that the third-generation Gaudi AI chip, set to launch in Q3, will outperform competitors. He also noted that Intel has secured “20-plus” customers for the second and third-generation Gaudi chips and that the next-generation Falcon Shores AI chips will launch in late 2025.
Gaming Chips Sweep AI and Intel’s AI Challenges
On the OpenAI front, Microsoft invested in 2019 and quickly became a leader in the AI era. The 2022 release of ChatGPT sparked a wave of AI interest among the largest companies in the world. While this missed opportunity looms large for Intel, the company has been gradually losing the AI supremacy battle for over a decade.
“Intel failed in AI because they didn’t have a cohesive product strategy presented to their customers,” said Dylan Patel, founder of semiconductor research group SemiAnalysis. For more than two decades, Intel believed that a CPU, or central processing unit—similar to those powering desktop and laptop computers—could handle the processing tasks required for building and running AI models.
By the mid-2000s, researchers realized that gaming chips were far superior to CPUs for the extensive data crunching involved in AI. Designed for game graphics, these chips can perform numerous calculations in parallel. Nvidia’s engineers spent years modifying GPU architecture for AI uses and building software to leverage their capabilities. “When AI hit, Intel just didn’t have the right processor at the right time,” said Lou Miscioscia, analyst at Japanese investment bank Daiwa.
Nervana and Habana on Intel’s AI Challenges
Since 2010, Intel has made at least four attempts to produce a viable AI chip, including acquiring two startups and launching two major homegrown efforts. None have matched the success of Nvidia or AMD in the expanding market. In 2016, Intel’s CEO Brian Krzanich sought to acquire Nervana Systems for $408 million. Nervana’s technology, similar to Google’s tensor processing unit (TPU), focused on optimizing AI calculations.
In 2019, Intel bought Habana Labs for $2 billion and subsequently shut down Nervana’s efforts in 2020. While Intel’s data center business is expected to generate $13.89 billion this year, analysts predict Nvidia will generate $105.9 billion in data center revenue.
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Discover more about Makhdooms Store’s latest gadgets, mini projectors, wireless headphones, LED projectors, and travel backpacks. Visit our blog page for more insights and updates.
For more tech updates, check out our latest products and news at Makhdooms Store.
