Intel (INTC) announced the launch of two new artificial intelligence chips on Tuesday, aiming to strengthen its data center business and compete against rivals AMD (AMD) and Nvidia (NVDA). The new offerings, the Xeon 6 CPU and Gaudi 3 AI accelerator, promise enhanced performance and energy efficiency as Intel positions itself as a key player in the AI sector.
This product launch comes in the wake of reports from the Wall Street Journal that Qualcomm (QCOM) is exploring a potential acquisition of Intel to enhance its chip business. Additionally, Bloomberg reported that Apollo Global Management is considering a significant investment in Intel to support CEO Pat Gelsinger’s ambitious turnaround strategy.
The Xeon 6 chip boasts performance cores that deliver double the performance of its predecessor, designed for AI and high-performance computing in edge and cloud environments. Meanwhile, the Gaudi 3 processor is specifically aimed at generative AI applications and is set to compete with Nvidia’s H100 and AMD’s MI300X chips. Intel has partnered with IBM (IBM) to integrate Gaudi 3 accelerators into its IBM Cloud, emphasizing a lower total cost of ownership for clients.
“Demand for AI is driving a major transformation in the data center, and the industry is seeking diverse hardware, software, and developer tools,” stated Justin Hotard, Intel’s executive vice president and general manager of the Data Center Artificial Intelligence Group.
Despite the promising new products, Intel faces challenges as it competes in a market where Nvidia’s stock has soared by 142% this year, while Intel’s shares have dropped by 52%. AMD’s stock has also risen by 12% during the same period.
In its recent quarterly earnings report, Intel reported disappointing revenue and earnings, leading to a plan to cut 15% of its workforce and suspend dividend payments. Gelsinger is focused on revitalizing Intel by advancing chip development for data centers and consumer PCs, along with expanding its manufacturing capabilities.
Although Intel is scaling back construction on planned plants in Europe and delaying the opening of its advanced packaging facility in Malaysia until demand improves, it recently announced partnerships to produce custom chips for Amazon (AMZN) and Microsoft (MSFT), marking a step forward in its third-party chip manufacturing efforts.
Intel is also restructuring its business by separating its foundry segment from its design operations, aiming to reassure clients that their chip designs will remain confidential.
The ongoing struggles have made Intel an attractive target for acquisition, particularly for Qualcomm, which is looking to diversify beyond its smartphone-focused business as sales in that sector have slowed. However, gaining ground in the laptop chip market will require considerable effort and time.
