Intel (INTC) on Tuesday unveiled two artificial intelligence chips aimed at improving its data center business and taking market share from rivals AMD (AMD) and Nvidia (NVDA). The new chips, the Xeon 6 CPU and Gaudi 3 AI accelerator, promise to deliver improved performance and power efficiency and come at a time when Intel is trying to prove it has what it takes to be a major player in AI.
The announcement came after a Wall Street Journal report said Qualcomm (QCOM) was considering buying Intel to bolster its own chip business, while Bloomberg reported that Apollo Global Management was interested in investing billions of dollars in the chipmaker to support Intel CEO Pat Gelsinger’s massive turnaround plan. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
Intel says the new Xeon 6 chips feature P-cores, or performance cores, that are twice as powerful as the previous generation. The company says the chips are built for AI and high-performance computing scenarios, including edge and cloud systems.
Meanwhile, the Gaudi 3 processor is designed specifically for generative AI applications and will compete directly with Nvidia’s H100 and AMD’s MI300X chip lines. Intel said IBM is using its Gaudi 3 accelerators as part of its IBM Cloud with the goal of lowering total cost of ownership.
“Demands for AI are driving a major transformation in the data center, and the industry demands choice in hardware, software and developer tools,” Justin Hotard, Intel executive vice president and general manager of the Data Center Artificial Intelligence Group, said in a statement.
“With the launch of Xeon 6 with P-cores and Gaudi 3 AI accelerators, Intel is enabling an open ecosystem where customers can implement all their workloads with better performance, efficiency and security.”
Intel was also quick to point out that 73% of GPU-accelerated servers designed to run AI applications use Xeon chips as the host CPUs they need to function properly. But Intel’s chips aren’t as popular as they once were. Instead, companies are snapping up Nvidia’s line of AI chips, sending the company’s stock soaring.
Nvidia shares are up an astounding 142% so far this year, while Intel shares are down a whopping 52%. AMD shares are up 12% in the same period.
In its last quarterly earnings report in August, Intel reported lower-than-expected revenue and earnings per share and provided disappointing guidance for the current quarter. The company also announced it would cut its workforce by 15% and suspend dividend payments.
The story continues
Gelsinger is trying to restore Intel to its former glory by pushing his team to develop more advanced chips for data centers and consumer PCs while building out manufacturing capabilities.
Intel wants to significantly expand its semiconductor foundries — the facilities that make semiconductor chips — both in the U.S. and overseas, but the company said last week it was putting a planned factory in Europe on hold and idling an advanced packaging plant in Malaysia until demand for semiconductors recovers.
Intel announced last week that it would make custom chips for Amazon (AMZN) and also announced the exciting news that Microsoft (MSFT) would join as a new major customer for its nascent third-party chip manufacturing business.
The company also said separating its foundry division from its design business would clarify the separation between the two entities and give potential customers peace of mind that Intel’s design teams do not have access to their chip designs.
But Intel has struggled amid its recovery and has become a takeover target for companies like Qualcomm, which could use Intel to significantly expand its chip business into the data center and PC businesses.
Qualcomm relies heavily on its smartphone division, but smartphone sales have slowed in recent years as customers hang on to their devices for longer, leaving the company to seek new growth opportunities.
One such opportunity is developing laptop chips to rival Intel’s own line of processors, but it will be a long time before Qualcomm can steal Intel’s PC market share, if it can do so at all.
Contact Daniel Howley at dhowley@yahoofinance.com and follow him on Twitter: @DanielHowley.
For the latest technology news impacting the stock market, click here
Read the latest financial and business news from Yahoo Finance
