Intel Missed Early Opportunity to Invest in OpenAI

2024-08-08

About seven years ago, Intel could have invested in and acquired a significant stake in OpenAI, a young company focused on generative artificial intelligence. In 2017 and 2018, Intel explored the possibility of investing in OpenAI. According to a report by Reuters, Intel considered buying a 15% stake in OpenAI for $1 billion or providing hardware to OpenAI at cost through a bundled deal. The report states that the former CEO of Intel, Swan, prevented this investment because he believed that AI models would not penetrate the market in the near future. Comparing Intel's position with Nvidia's success in AI hardware In light of the tremendous success OpenAI achieved in the following years, especially with the launch of ChatGPT in 2022, this decision is ironic. If Intel had collaborated with OpenAI, it may not have had to rely on competitors like Nvidia as it does now. Nvidia has become one of the most prominent companies in the field of AI hardware, particularly with its graphics processing units (GPUs). On the other hand, Intel has not yet achieved significant accomplishments in the field of AI. The latest results from Intel's AI and Data Center Group (DCAI) reveal some ongoing issues. According to the latest earnings report, the company's revenue and operating profit for the Data Center and AI group have declined. However, Intel continues to advance the production of the Xeon 6 "Sierra Forest" processor and plans to launch the Xeon 6 "Granite Rapids" CPU in the near future. Additionally, Intel's Gaudi 3 AI accelerator is expected to be deployed by more customers later this year, with over 20 confirmed adopters currently. The company has previously made strategic acquisitions, such as the acquisition of Nervana Systems in 2016 to compete against Google's Tensor Processing Unit, and the acquisition of Habana Labs in 2019 to enhance its AI capabilities. Despite these measures, Intel's AI division still struggles to pose a significant threat to Nvidia. Comparing Swan and Krzanich's operational focus and strategic acquisitions However, even in the face of these challenges, Intel has not given up on enhancing its position in the AI market. CEO Pat Gelsinger recently stated that Intel has an impressive range of AI chips. Intel plans to release the third-generation Gaudi AI chip and aims to release the Falcon Shores AI chip by the end of 2025. Gelsinger noted that the adoption rates of these products are expanding, and the company has a series of plans to increase its market share in AI. In contrast, Bob Swan, who focused more on operations and finance during his tenure at Intel, may have contributed to the company's failure to adopt OpenAI technology. Swan served as the CEO of the company from 2018 to 2021. Swan's predecessor, Brian Krzanich, oversaw a series of strategic acquisitions aimed at enhancing Intel's AI capabilities. The acquisition of Nervana Systems was initially intended to address Google's AI hardware, but Intel shifted its focus to the Habana Labs deal and other AI plans.