One of Intel’s biggest mistakes of the past decade was failing to challenge Nvidia’s dominance in the rapidly growing artificial intelligence (AI) chip market.

A cautious start to a reform journey

In his first earnings call with analysts as Intel’s new CEO, Lip-Bu Tan outlined how the U.S. chipmaker hopes to change that, but cautioned, “This won’t be a quick fix.”

Tan stated that Intel will review and refine its existing product line to better align with emerging trends in the AI market, such as robotics and autonomous agents.

This will be challenging, as Nvidia not only sells chips but also offers complete data center solutions, including chips, cables, and software compilers. Tan said Intel would take a similar approach.

Focus on internal resources

In the short term, Intel will refrain from further acquisitions, according to CFO David Zinsner. “Our current priority is improving our financial situation,” Zinsner said in an interview with Reuters.

This implies that Tan’s efforts to eventually build a clear AI strategy will rely heavily on internal resources. “We’re taking a holistic approach to reshape our product portfolio and optimize it for new and emerging AI workloads,” the new CEO said.

Lessons from the past: Acquisitions aren’t sustainable

Previously, Intel’s approach involved acquiring startups developing new AI chips. Between 2016 and 2019, Intel acquired Movidius, Mobileye, Nervana, and Habana Labs, hoping these deals would help it gain traction in the AI market.

While Mobileye has maintained a strong position in autonomous vehicles and Intel still retains a stake in it, the other acquisitions failed to significantly close the gap with Nvidia.

Opportunities exist, but they’re not easy

“Intel has a long history of developing breakthrough chips in-house, so I’m not surprised they’re focusing on AI development. If they can build a supporting software ecosystem to enable easy deployment of these new chips, Intel has a chance, but it’s a big ‘if’,” said Bob O’Donnell, chief analyst at Technalysis Research.

However, other analysts argue that Nvidia’s dominance and the trend of major cloud providers like Amazon and Google developing their own AI chips make it difficult for Intel to gain market share.

Intel has revealed some aspects of its overall AI strategy, focusing on chips and systems for AI applications and edge devices, according to Hendi Susanto, portfolio manager at Gabelli Funds (which holds Intel stock). “While these areas are promising, their scale and growth rate remain uncertain,” Susanto said.

Lip-Bu Tan’s return marks a strategic pivot

Lip-Bu Tan, 65, previously ran chip design software company Cadence Design Systems and is a renowned tech investor. He resigned from Intel’s board in August 2024 due to disagreements over the company’s direction after years of underperformance.

His return to Intel in March as CEO marks a significant turning point, as he takes over a company marred by strategic missteps under three previous CEOs.

Joint Venture deal with TSMC

Recently, TSMC and Intel reached a preliminary agreement to form a joint venture to operate some of Intel’s fabs, according to The Information.

As part of the discussions, TSMC (the world’s largest contract chipmaker) considered sharing some of its manufacturing techniques with Intel in exchange for a 20% stake in the new venture, sources told The Information.

Intel and other U.S. chipmakers would retain majority ownership of the venture, which would include some of Intel’s fabs. In March, Reuters reported that TSMC proposed including Nvidia, AMD, and Broadcom as stakeholders in the venture, following a U.S. government request for Taiwan’s chip giant to help revive struggling American tech brands.

Lip-Bu Tan’s return amid turbulence

Also in March, Intel appointed Tan as CEO to revive the company after it missed the AI-driven chip boom, while continuing to pour billions into expanding its chip manufacturing.

If the joint venture is finalized, it would represent a major initial move for Tan. At the Intel Vision conference in Las Vegas in late March, Tan announced plans to divest non-core assets.

Intel’s efforts to manufacture chips for external customers have faced hurdles due to its inability to match TSMC’s service and technical support levels, leading to delays and test failures, a former Intel executive told Reuters.

Intel reported a net loss of $18.8 billion in 2024, its first since 1986, largely due to major impairment charges. Intel’s stock lost 60% of its value in 2024 but has since partially rebounded, rising about 7.18% year-to-date.

Source: Sơn Vân (Tạp chí Một thế giới)