Ten Years after Acquiring Intel (INTC.US), Launches Full-Stack AI Strategy, Tackles Nvidia (NVDA.US)

The Zhitong Finance App learned that in the past ten years, one of the biggest strategic mistakes of Intel (INTC.US) was its failure to shake the dominance of Nvidia (NVDA.US) in the rapidly growing artificial intelligence (AI) chip market.

In his first earnings call as Intel's new CEO and analysts, Chen Liwu outlined how Intel wants to change this situation, but he also warned: “This will not happen overnight.” Chen Liwu said that he will comprehensively sort out Intel's existing products so that they can better meet emerging trends in the AI market, such as those suitable for robotics and the field of intelligent agents that can perform tasks for human users.

This task is extremely challenging because Nvidia is no longer just selling chips, but a complete suite of data center solutions, covering everything from chips and cables to software compilers. Chen Liwu said on Thursday that Intel will also adopt a similar strategy.

Chief Financial Officer David Zinsner said that Intel will not carry out too many acquisitions in the short term. “At this stage, our top priority is to improve the balance sheet situation,” Zinsner said in an interview.

This means that Chen Liwu's efforts to finally integrate a coherent set of AI strategies will mainly be realized through independent research and development.

Chen Liwu said, “We are taking a comprehensive approach to redefining our product portfolio and optimizing our products for emerging AI workloads. Our goal is to be the platform of choice for our customers. This requires us to radically transform our design and engineering philosophy and fully anticipate customer needs ahead of time.”

Historically, Intel's strategy has been to let AI startups develop new chips and then acquire these companies. Between 2016 and 2019, the company acquired a range of chip companies, including Movidius, Mobileye (MBLY.US), Nervana, and Habana Labs. Intel originally hoped these acquisitions would help it enter the artificial intelligence market.

Although Mobileye still maintains a strong market position in the field of autonomous driving, and Intel still holds shares in the company after its spin-off, none of the remaining acquisitions helped Intel gain an advantage over Nvidia's competition.

Bob O'Donnell, chief analyst at Technalysis Research, said, “Intel has a long history of independently developing important new chips, so I'm not surprised to see them focus on in-house R&D in the AI field. If they can build the right software support system to make it easier to deploy these new chips, then they have an opportunity — but it's a big 'if'.”

However, other analysts believe that Nvidia's dominant position, combined with large cloud computing companies such as Amazon (AMZN.US) and Google (GOOGL.US), are working hard to develop their own AI chips, so there are few opportunities for Intel to break into this market.

Hendi Susanto, portfolio manager at Gabelli Funds, which holds shares in Intel, said the company has revealed some information on its overall AI strategy, and the company will focus on developing chips and systems to run AI applications, as well as edge devices.

“While these areas have shown some potential for development, there is still uncertainty about the scale and pace of their growth,” Susanto added.