Aug 08, 2024 15:00:00

Intel once missed out on a chance to buy OpenAI stock at a bargain price

OpenAI is now at the forefront of AI development, and

is said to have reached $3.4 billion in annualized sales in June 2024. Before OpenAI gained much attention, Intel had the opportunity to buy OpenAI shares at a low price, but missed the opportunity, according to Reuters, an overseas media outlet.

How chip giant Intel spurned OpenAI and fell behind the times | Reuters
https://www.reuters.com/technology/artificial-intelligence/how-chip-giant-intel-spurned-openai-fell-behind-times-2024-08-07/

Intel reportedly gave up a chance to buy a stake in OpenAI in 2017 | Tom's Hardware
https://www.tomshardware.com/tech-industry/artificial-intelligence/intel-reportedly-gave-up-a-chance-to-buy-a-stake-in-openai-in-2017

OpenAI, founded as a non-profit organization in 2015, was attracting attention in some industries, including receiving $1 billion (approximately 108 billion yen at the time) in funding from Microsoft in 2019. However, at that time, 'generative AI' had not yet penetrated the public's attention, and it was only after OpenAI released ChatGPT in 2022 that it began to attract the public's attention.

At the time of writing, companies with deep ties to OpenAI include Microsoft, which has been a major investor, and NVIDIA, which boasts a large market share in AI hardware. However, according to four sources contacted by Reuters, Intel also had a chance to buy OpenAI shares at a bargain price.

Sources say that over the course of several months in 2017 and 2018, Intel and OpenAI executives discussed options such as Intel buying 15% of OpenAI shares for $1 billion in cash (approximately 111 billion yen at the time). There was also an option for Intel to acquire an additional 15% stake if Intel manufactured hardware for OpenAI at cost.

However, the deal ultimately fell through when then-Intel interim CEO

Bob Swan decided that he didn't see a market for generative AI that would generate returns anytime soon.

OpenAI was interested in an investment from Intel because it would allow it to build its own infrastructure and reduce its reliance on Nvidia chips, but Intel's data center division was not keen on the cost of developing AI products, the sources said.

Ultimately, OpenAI released ChatGPT and rose to the top of the AI industry, so Intel missed its chance. However, some analysts point out that Intel has been focusing on CPUs rather than GPUs, which are more suited to running AI, and has been lagging behind in the race for AI dominance even before this deal. Daiwa Securities analyst Lou Mishosha said, 'When AI hit, Intel didn't have the right processors.'

In recent years, Intel has been focusing on AI processors, and in April 2024 announced the AI accelerator 'Gaudi 3'.

Intel announces AI accelerator 'Gaudi 3', which is faster and consumes less power than NVIDIA's H100 and even beats the H200 in some tests - GIGAZINE

Gaudi 3 claims to surpass NVIDIA's AI-specialized GPU 'H100' in both AI learning performance and AI inference performance, and CEO Pat Gelsinger claims that there are more than 20 customers for Gaudi 2 and Gaudi 3.

'We are nearing the completion of our historic pace of design and process innovation and are encouraged by the product pipeline we are building to capture a greater share of the AI market in the coming years,' an Intel spokesman told Reuters.