Intel’s new CEO, Lip-Bu Tan, has unveiled a comprehensive strategy to challenge Nvidia’s dominance in the rapidly growing artificial intelligence (AI) chip market. During his first earnings conference call with analysts, Tan acknowledged that Intel’s failure to counter Nvidia’s market leadership was one of the company’s significant missteps over the past decade. ‘This is not a quick fix,’ Tan warned, emphasizing the complexity of the task ahead.
Tan plans to thoroughly review Intel’s existing product lineup to enhance their competitiveness in emerging AI trends such as robotics and AI agents capable of performing tasks for human users. This approach involves a holistic redefinition of Intel’s portfolio to optimize its products for new and emerging AI workloads. ‘Our goal is to become the platform of choice for our customers,’ Tan stated. ‘This requires us to radically evolve our design and engineering mindset and anticipate the needs of our customers well in advance.’
The challenge is significant as Nvidia has evolved beyond just selling chips to offering complete data center solutions, including chips, cables, and software compilers. Tan indicated that Intel will adopt a similar comprehensive approach. Chief Financial Officer David Zinsner noted that in the near term, Intel will prioritize improving its balance sheet over making new acquisitions.
Historically, Intel has attempted to acquire AI startups to bolster its position in the AI market. Between 2016 and 2019, the company acquired several chip companies, including Movidius, Mobileye, Nervana, and Habana Labs. However, except for Mobileye, which maintained a strong position in autonomous driving, these acquisitions failed to significantly impact Intel’s market standing against Nvidia.
Analysts are divided on Intel’s prospects. Bob O’Donnell, chief analyst at Technalysis Research, believes that if Intel can develop the necessary software support to facilitate the deployment of its new chips, it has a chance to challenge Nvidia. In contrast, other analysts argue that Nvidia’s dominant position, coupled with the efforts of major cloud-computing firms like Amazon and Google to develop their own AI chips, leaves limited room for Intel to break into the market.
Intel’s strategy focuses on developing chips and systems that run AI applications and edge devices. While these areas show promise, the scale and pace of their growth remain uncertain, according to Hendi Susanto, a portfolio manager at Gabelli Funds, which holds Intel shares.
