INTEL, once a leading name in the computer chip industry, missed a significant opportunity in the early days of artificial intelligence (AI) that could have altered its current trajectory. Seven years ago, Intel had a chance to invest in OpenAI, a then-small research organization specializing in generative AI.
In 2017 and 2018, Intel executives discussed the possibility of buying a 15% stake in OpenAI for $1 billion in cash. They also explored the idea of acquiring an additional 15% stake if Intel provided hardware to OpenAI at cost price. However, Intel chose not to proceed with the investment. This decision was influenced by then-CEO Bob Swan’s skepticism about the near-term market potential of generative AI models, according to anonymous sources familiar with the negotiations.
OpenAI sought Intel’s investment to reduce its dependency on Nvidia's chips and to build its own infrastructure. The deal fell through partly because Intel’s data center unit was unwilling to provide products at cost.
Intel’s decision to bypass the deal with OpenAI, which later launched the revolutionary ChatGPT in 2022 and is now valued at around $80 billion, has not been publicly disclosed until now. This missed opportunity is one of several strategic missteps that have hindered Intel's progress in the AI era.
Recently, Intel faced a dramatic stock price drop of over 25% following its second-quarter earnings report, marking its worst trading day since 1974. For the first time in three decades, Intel’s market value fell below $100 billion. Despite its former prominence, the company struggles to introduce a competitive AI chip product.
Intel now trails behind rivals such as Nvidia, valued at $2.6 trillion, which has successfully transitioned from gaming graphics to AI chips crucial for large generative AI systems like GPT-4 and Meta Platforms' Llama models. Intel also lags behind AMD, which is valued at $218 billion.
Intel’s spokesperson pointed to CEO Pat Gelsinger’s recent comments about the company's AI progress. Gelsinger highlighted that Intel's third-generation Gaudi AI chip, set to launch later this year, is expected to outperform competitors. Additionally, Intel aims to release its Falcon Shores AI chip in late 2025.
While Intel missed the chance to invest in OpenAI, Microsoft stepped in and invested in 2019, positioning itself at the forefront of the AI revolution sparked by ChatGPT’s release. This setback for Intel underscores a broader issue: the company’s struggle to present a cohesive product strategy and adapt to the rapid advancements in AI technology.
For years, Intel focused on CPUs (central processing units) for AI tasks, believing they were more suited for processing compared to GPUs (graphics processing units). However, GPUs, initially designed for gaming, proved to be more efficient for handling the complex calculations required for AI models. Nvidia has since optimized GPU architecture for AI and developed the necessary software.
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