Analysis – Failed AI transactions in several years, Intel plans to local challenges to NVIDIA
By Arsheeya Bajwa, Max A. Cherney and Stephen Nellis
(Reuters) – One of Intel’s biggest mistakes in the past decade was its failure to challenge Nvidia’s dominance in the fast-growing market for AI chips.
Lip-bu Tan outlined how Intel hopes to change that, during his first earnings call with analysts, but warned: “It’s not a quick fix.” Tan said he will tease out Intel’s existing products to enable it to improve trends in emerging trends in the AI market, such as robots and agents, that can perform tasks for human users.
This business will be challenging because Nvidia no longer sells only chips – it sells the entire data center from chips to cables to software compilers. Tan said on Thursday that Intel will take a similar approach.
Chief Financial Officer David Zinsner said Intel will not make more acquisitions in the near term. “At this point, our priorities will need to bring the balance sheet into a better place,” Sina told Reuters in an interview.
This means Tan’s efforts to finally develop a coherent AI strategy will be native.
“We are taking a holistic approach to redefining our portfolio to optimize our products for new and emerging AI workloads,” Tan said. “Our goal is to be the platform of choice for our customers. This requires us to fundamentally develop our design and engineering mindset and anticipate our customers’ needs in advance.”
Historically, Intel’s approach was to leave AI startups to develop new chips and then buy them. Between 2016 and 2019, the company bought a range of chip companies – Movidius, Mobileye, Nervana and Habana Labs, hoping it will help it break the AI market.
While Mobileye has maintained a strong position in autonomous driving and Intel retained its stake in the company after the split, the remaining deals failed to help Intel’s appeal to Nvidia.
“Intel has a long history of building important new silicon developments within its own walls, so it’s not shocked to see them focus on the internal development of AI,” Bob O’Donnell, chief analyst at Technalysisy Research, told Reuters. “If they can build the proper software support set to help make these new chips easy to deploy, then they have a chance – but that’s a big word.”
But other analysts say NVIDIA’s dominance, and major cloud-building companies like Amazon.com and Google’s efforts to build their own AI chips, have little room for Intel to enter the market.
