Intel, now struggling against AI competitors, turned down an opportunity to own 15% of OpenAI
Intel’s lagging fortunes might have been completely different if it had made a single funding.
In 2017 and 2018, the tech firm had the prospect to take a 15% stake in OpenAI for $1 billion, Reuters reported, citing 4 folks with direct information of the discussions. On prime of that, Intel might have purchased one other 15% stake if it supplied OpenAI its {hardware} at price, in response to two of the folks.
OpenAI courted Intel as an investor as a result of it will have lowered the startup’s reliance on Nvidia, whose chips at the moment are a mainstay within the AI sector.
However Intel handed on the deal, partly primarily based on the idea that generative AI fashions wouldn’t acquire traction within the close to future, leaving the corporate unable to recoup its funding, in response to three of the sources interviewed by Reuters.
A spokesperson for Intel declined to remark to Fortune.
Since then, Intel has struggled to realize a foothold within the red-hot AI sector, and its inventory has plummeted, dropping 58% of its worth simply this 12 months. In the meantime, OpenAI leads the market after releasing its well-liked AI chatbot, ChatGPT, in 2022. After experiencing its worst stock decline in 50 years final week, Intel’s $84 billion market cap is nearly equal to OpenAI’s most recent valuation of $80 billion.
Though Intel was one of many world’s most necessary chipmakers twenty years in the past, the corporate has didn’t adequately benefit from the AI mania that has made rival Nvidia one of many most valuable companies in the world.
For years, Intel centered its assets on enabling CPUs, like those who energy laptops and desktops, for dealing with AI processes, as a substitute of prioritizing GPUs, graphic chips utilized in gaming, that are more practical at dealing with the myriad calculations required by AI, Reuters reported. Rivals like Nvidia and Superior Micro Units (AMD), in distinction, succeeded by working with GPUs, whereas Intel largely missed the boat. Within the third quarter, Intel will launch its Gaudi 3 AI chip, which CEO Pat Gelsinger said will have the ability to outcompete Nvidia’s H100 GPUs.
Intel’s earnings final week fell far wanting analyst expectations, resulting in a 26% single-day selloff that pushed its market cap under $100 billion for the primary time in 30 years. Gelsinger informed workers final week that the corporate will cut 15% of its workforce, or about 15,000 jobs, in a significant cost-cutting effort.
“Merely put, we should align our price construction with our new working mannequin and basically change the best way we function,” Gelsinger wrote within the memo.
Intel passing on the OpenAI funding mirrors different missed alternatives by big corporations that didn’t see the longer term clearly. In 2000, Blockbuster famously turned down a suggestion to purchase a fledgling Netflix for $50 million. The streaming firm is price upwards of $250 billion at this time. Throughout the tech growth of the late ’90s, Yahoo turned down the chance to purchase Google for $1 million.
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