Intel Missed: The Untold Story of Declining to Invest in OpenAI
Intel had the opportunity to acquire a stake in OpenAI, a fledgling non-profit research group working on the emerging subject.
For US chip giant Intel, once the darling of the computer age, the transition to the AI era has been less smooth. Things might have been quite different if Intel had made a key investment decision years ago.
Missed Investment Opportunity:
About seven years ago, Intel had the chance to buy a stake in OpenAI, then a fledgling non-profit research organization working in the nascent field of generative artificial intelligence. According to four people with direct knowledge of those discussions, Intel executives discussed various options with OpenAI over several months in 2017 and 2018. These options included Intel buying a 15% stake for $1 billion in cash and potentially another 15% stake if Intel made hardware for OpenAI at cost.
Ultimately, Intel decided against the deal. Then, CEO Bob Swan did not believe generative AI models would make it to market shortly and thus did not see the investment as beneficial for the chipmaker, according to three sources. Intel’s data center unit did not want to produce hardware at cost, further complicating the potential deal.
Strategic Misfortunes and Market Impact:
This decision, which has not been made public until now, is one of several strategic misfortunes for Intel. Once at the cutting edge of computer chips in the 1990s and 2000s, Intel has struggled in the AI era. Intel’s second-quarter earnings recently triggered a stock price decline of 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.
Meanwhile, Intel’s rivals have surged ahead. At $2.6 trillion, Nvidia has pivoted from video game graphics to AI chips essential for building, training, and operating large generative AI systems like OpenAI’s GPT-4 and Meta Platforms’ Llama models. Intel has also fallen behind AMD, which is valued at $218 billion.
Intel Current AI Progress:
In response to questions about its AI progress, an Intel spokesperson referred to recent comments by CEO Pat Gelsinger. Gelsinger mentioned the company’s third-generation Gaudi AI chip, which is set to launch in the third quarter of this year and is expected to outperform rivals.
He also noted that Intel had “20-plus” customers for Gaudi’s second and third generations and that the next-generation Falcon Shores AI chip would launch in late 2025.
“We are nearing the completion of a historic pace of design and process technology innovation, and we are encouraged by the product pipeline we’re building to capture a greater share of the AI market going forward,” the spokesperson told Reuters.
