Intel develops in-house AI chips to compete with Nvidia

Intel’s new CEO Lip-Bu Tan faces a daunting challenge in taking on Nvidia’s AI chip dominance, confronting years of missteps that left the company trailing in the most lucrative tech market of the decade. Unlike previous strategies that relied heavily on acquisitions, Tan is pivoting to an in-house development approach focused on optimizing Intel’s existing portfolio for emerging AI applications like robotics and intelligent agents, while acknowledging there’s “no quick fix” to the company’s competitive positioning.

The big picture: Intel’s new CEO is implementing a comprehensive strategy overhaul to challenge Nvidia in the AI chip market, where Intel has repeatedly failed to gain traction despite multiple acquisitions.

• Tan plans to “radically evolve” Intel’s design approach by optimizing existing products for emerging AI workloads rather than primarily relying on acquisitions.
• The company aims to adopt Nvidia’s successful model of selling complete AI infrastructure systems—from chips to cables to software—rather than just individual components.

What they’re saying: “We are taking a holistic approach to redefine our portfolio, to optimize our products for new and emerging AI workloads,” Tan told analysts during his first earnings call.

• He emphasized that Intel’s goal is to “become the platform of choice for our customers,” which requires anticipating customer needs well in advance.
• CFO David Zinsner indicated to Reuters that major acquisitions aren’t forthcoming: “Our priority will need to be, at this point, getting the balance sheet to a better place.”

Historical context: Intel has a troubled history of attempted AI market entries through acquisitions that largely failed to produce results against Nvidia.

• Between 2016 and 2019, Intel purchased Movidius, Mobileye, Nervana, and Habana Labs, but only Mobileye maintained a strong market position in autonomous driving.
• The company’s traditional strength in internal chip development has not translated to success in the AI acceleration market.

Industry reactions: Analysts remain skeptical about Intel’s ability to break into the highly competitive AI chip market.

• “Intel has a long history of building important new silicon developments within its own walls,” Bob O’Donnell of Technalysis Research told Reuters, but emphasized the critical importance of software support.
• Other analysts noted that Nvidia’s dominance, combined with major cloud providers building their own chips, leaves little room for Intel to establish a significant presence.

The strategy: Intel’s emerging AI approach will focus on chips for running AI applications and edge devices rather than trying to directly compete in data center AI training hardware.

• Gabelli Funds portfolio manager Hendi Susanto, who holds Intel shares, noted that “while these areas show promise, the scale and pace of their growth remain uncertain.”