In the 1990s and 2000s, Intel was the epitome of innovation in computer chip manufacturing. Yet, since 2020, the company’s market dominance has been increasingly threatened by competitors like Nvidia and AMD, which have made significant strides in technology.
The Missed Opportunity with OpenAI
In 2017, Intel had a golden opportunity to invest in OpenAI, a then-nascent non-profit research organization focused on the emerging field of generative artificial intelligence. According to Reuters, Intel executives engaged in discussions with OpenAI over the course of 2017 and 2018, considering a partnership that could have secured Intel a 15% stake in OpenAI for $1 billion. There was also the possibility of Intel acquiring an additional 15% stake if it agreed to supply hardware to OpenAI at cost.
A Strategic Misstep
However, Intel ultimately declined both offers. Sources familiar with the matter reveal that Intel’s leadership was skeptical about the short-term return on investment from generative AI and was unwilling to provide hardware at cost. This decision allowed OpenAI to turn to Nvidia, whose chips have since become integral to OpenAI’s operations and success. As a result, Nvidia’s rise has been meteoric, surpassing Intel in both market value and technological relevance.
The decision to pass on OpenAI, which has since launched the groundbreaking ChatGPT and is now valued at approximately $80 billion, had not been publicly disclosed until now. The consequences of this decision have become increasingly evident. Last week, Intel’s stock took a significant hit following disappointing second-quarter earnings, marking its worst trading day since 1974. For the first time in three decades, Intel’s market value has fallen below $100 billion.
Once a symbol of quality with its “Intel Inside” slogan, the company is now struggling to release a competitive AI chip. Meanwhile, Nvidia, now valued at $2.6 trillion, has transitioned from a focus on video game graphics to dominating the AI chip market, supporting AI giants like OpenAI and Meta Platforms.
Intel’s Response and Future Prospects
When questioned about Intel’s progress in AI, a company spokesperson referred to recent comments by CEO Pat Gelsinger. He highlighted the upcoming launch of Intel’s third-generation Gaudi AI chip, which is expected to outperform competitors. Gelsinger also mentioned that Intel has secured over 20 customers for its Gaudi chips and plans to launch its next-generation Falcon Shores AI chip in late 2025.
Despite these advancements, industry experts and former Intel executives believe the company has been losing the battle for AI supremacy for over a decade. Dylan Patel, founder of semiconductor research group SemiAnalysis, attributed Intel’s struggle in the AI space to a lack of a cohesive product strategy.
For years, Intel bet on the central processing unit (CPU) as the best tool for AI tasks, dismissing the potential of graphics processing units (GPUs) used by rivals like Nvidia and AMD. However, by the mid-2000s, researchers discovered that GPUs were far more efficient at the intensive data processing required for AI. Nvidia’s engineers have since fine-tuned GPU architecture for AI applications, positioning the company as a leader in the industry.
As Lou Miscioscia, an analyst at Japanese investment bank Daiwa, succinctly put it, “When AI hit… Intel just didn’t have the right processor at the right time.”