Intel is all over the place, with Apollo considering a $5 billion investment to save them, while Qualcomm is eyeing an acquisition. But Intel needs no one—under Pat Gelsinger’s leadership, it’s determined to remain independent and emerge stronger.
“I think Intel will become a shadow of itself. It will go the way of Motorola and BlackBerry. Right now the vultures are coming for the carcass. Apollo has jumped in. They are a well-known distressed buyout shop. The Apollo team specialises in these asset plays. First, they will make a $5b direct investment. Maybe take 1-2 board seats, buy first rights to 2-3 core assets and begin the divestiture playbook,” said Vijar Kohli co-founder of Golden Door.
Intel seems to be at a crossroads, and nothing is going their way. Recent reports indicate that Qualcomm, having recently entered the PC processor market, is exploring a potential takeover of Intel, renowned for its CPUs and X86 architecture. However, the deal is described as “far from certain” and would likely face significant regulatory scrutiny.
With Intel’s acquisition, Qualcomm is possibly trying to strengthen its hold in the PC market and add Intel’s Lunar Lake with x86 architecture in its portfolio. “The interests that Qualcomm might have in Intel would be strictly on the design side, on the chip designs for PCs. That’s still a huge market. And just Intel and AMD are players there, and it’s likely to remain the dominant form of technology for PC CPUs,” said JoAnne Feeney, Advisors Capital Management portfolio manager.
Surprisingly, when Microsoft recently announced its Copilot + AI PCs, it actively showed love for Qualcomm processors more than for Intel and AMD, as the capabilities of the current generation of both companies were not even close to what Qualcomm was offering.
Meanwhile Intel chief Pat Gelsinger is trying its best to save the company. He even sent a memo to his employees in which he said that, “There has been no shortage of rumors and speculation about the company.”
Coming back to the roots
To compete with NVIDIA and capitalise on the generative AI wave, Intel began manufacturing GPUs, however, unlike NVIDIA, it has struggled to gain market share. According to a recent report, NVIDIA holds 88% of the GPU market share, while Intel is struggling with a minuscule share.
Meanwhile, Intel is all set to launch the Gaudi 3 accelerator today, and it will be interesting to see how the market responds to it. Indian AI companies are among the primary customers of Intel GPUs, as they are comparatively more affordable than those from NVIDIA. Notable Indian customers of Intel include Ola, Krutrim, Zoho, Infosys and CtrlS.
In 2025, the successor to Gaudi 3, Falcon Shores, will merge the AI capabilities of Gaudi with the powerful GPUs from Intel, all within a single package. Intel also plans to onboard another version of the AI accelerator superchip, Falcon Shores 2, by 2026, which will be based on the Gaudi 3 architecture.
However, Intel could be shifting its focus away from GPUs this year. To turn around the fortunes of the company, Intel’s chief urged the team to build on the momentum in the Foundry business as they approach the launch of Intel 18A. He also called for urgency in creating a more competitive cost structure, with the goal of reaching the $10 billion savings target outlined last month.
Alongside these efforts, he stressed the importance of refocusing on Intel’s core x86 business while advancing the company’s AI strategy and simplifying the product portfolio to better meet the needs of customers and partners.
Moreover, Intel recently announced a partnership with Amazon Web Services (AWS) that includes co-investing in custom chip designs. This collaboration features a multi-year, multi-billion-dollar framework covering products and wafers from Intel.
As part of this agreement, Intel Foundry will create an AI fabric chip for AWS using the Intel 18A process. Intel will also produce a custom Xeon 6 chip on Intel 3, continuing its existing partnership that involves manufacturing Xeon Scalable processors for AWS. Looking ahead, Intel expects to have a strong collaboration with AWS on further designs across Intel 18A, Intel 18AP, and Intel 14A.
Recently, Intel has been awarded up to $3B in direct funding under the CHIPS and Science Act for the U.S. government’s Secure Enclave program. Moreover, Intel plans to create Intel Foundry as an independent subsidiary to strengthen its progress in the semiconductor market.
Intel Think ‘Outside’ the Box
It’s high time for Intel to pivot from being just an AI PC processor company to providing inference solutions as well. Currently, alongside NVIDIA, companies like SambaNova, Cerebras, and Groq are preferred by customers for their ability to deliver exceptionally fast inference solutions.
This may require a complete architectural change, which might initially seem difficult for Intel, but it is worth trying, otherwise, it risks becoming a sinking ship.
Not to forget, Intel last year launched 5th Gen Xeon processors, featuring AI acceleration in every core. These processors provide greater performance to customers deploying AI capabilities across cloud, network, and edge use cases.
Nokia is another good example for Intel which pivoted recently. The phone maker that once ruled the mobile market, “connecting people” for over two decades, is now planning to do the same with its networking solutions in the age of AI.
Recently, Nokia CEO Pekka Lundmark highlighted the company’s unique position in the global market, emphasising that Nokia is the only firm capable of delivering all key networking components outside of China.
Only time will tell what destiny lies ahead for the company. History shows that the most successful companies are those that have effectively pivoted to meet changing demand.
