Intel the company, a darling of the computing age at the forefront of the computer chip industry in the 90s and 2000s, as in the movie “Sliding doors” chose a path that then led to its current difficulties: it did not believe, like others, in the developments of artificial intelligence. And now it finds itself struggling, while even its stock could be ousted by Wall Street to make way for its rival Nvidia, which instead chose the other path and now finds itself in the Olympus of AI. Intel is not alone in having made that choice, but the path is the same: like Intel, others who were at the top at the time also find themselves in the shadow of the big ones. For example, Nokia, Cisco, Blackberry, Motorola.
Intel delisted?
The latest bad news from Intel is on Wall Street: after 25 years, the chipmaker could be removed from the Dow Jones Industrial Average on Wall Street. The reasons for this are to be found in other bad news that have emerged in recent weeks. Starting from the stock has fallen by nearly 60% this year, recording the worst performance among the companies on the list: competitor AMD lost less than 2%, while Nvidia shares have more than doubled their value this year. And it is precisely the share price that is the key element for inclusion in the Dow Jones, unlike the S&P 500 index, which takes into account the market value.
The disappointing quarterly report of Intel's beginning of August, triggered a drop in the share price of more than a quarter of their value (-26%), in the worst trading day since 1974 after the chipmaker suspended dividends and announced the 15% reduction in its workforce.
Sliding door: the crux of that key decision in 2018
When the internal combustion engine was discovered, there were many who believed that it could be used to run carriages or companies. When the Internet began to circulate, many believed that it was a fad that would not go far. Intel, along with other top companies in the sector, in 2017 and 2018, had the opportunity to buy a share of OpenAI, the then-fledgling nonprofit research organization working in a little-known field called generative artificial intelligence.
At the time, executives from the two companies discussed options, according to a Reuters reconstruction, including Intel buying a 15% stake in OpenAi for $1 billion and then another 15% if it produced hardware for the startup at cost. OpenAI, for its part, was interested in an investment from Intel because it would reduce its dependence on Nvidia chips and allow the startup to build its own infrastructure. But Intel finally said no: the then CEO Bob swan he didn't think that generative AI models would hit the market any time soon, making his investment worthwhile.
OpenAI, which then launched in 2022 chatGPT, is now valued at around $80 billion, according to calculations by the New York Times. Intel is now outpaced by its roughly $3 trillion rival Nvidia, which has seized the moment in the chip business by moving from video game graphics processors (GPUs) to the chips needed to build, aggregate and run large generative AI systems like OpenAI's GPT4 and Meta Platforms' Llama models.
Over the past decade, thanks to a financial effort in the order of 30 billion dollars, Nvidia, now led by Hensen Huang, has transformed itself from a simple supplier of chips (designed in-house and then produced by others under license) into a company capable of producing more complex systems from A to Z, including supercomputers. In the meantime, new-generation chips (two are born each year) are increasingly rented at a high price rather than sold, thus granting Nvidia great power over the entire digital system.
For two decades, Intel has instead believed that the CPU, or central processing unit, like the ones that power desktop and laptop computers, could more effectively handle the processing tasks required to create and run AI models.
“When AI took off… Intel just didn’t have the right processor at the right time,” said Lou Miscioscia, an analyst at Japanese investment bank Daiwa.
For the first time in 30 years, the tech company is worth less than $100 billion.
In Search of the Successful Ai Chip
The former market boss, whose marketing slogan was “Intel Inside” and which has long represented the gold standard of quality, is still struggling to bring a successful AI chip product. Intel CEO Pat Gelsinger he said the chip Gaudí AI third-generation chip that the company plans to launch in the third quarter of this year, will outperform its competitors. Gelsinger also said its next-generation Falcon Shores AI chip will launch in late 2025.
Not only that. Gelsinger and the group's top management are working on a new strategic plan which could include the sale of the programmable chip unit Altera and also the shelving of the project of a super factory from 32 billion dollars in Germany. Intel has already separated its foundry business from its design business and now wants to offer graphics processing units at more competitive prices compared to Nvidia. This year, the estimate is about $4 billion in AI chip sales, a far cry from the $30 billion Nvidia reported in a single quarter.
Intel and the Four Horsemen of the Dot-Com Era
Intel was part of the Four Horsemen of the dotcom era, along with Cisco Systems, Microsoft and Dell. On the OpenAI front, Microsoft stepped in with an investment in 2019, propelling itself to the forefront of the AI era sparked by the launch of ChatGPT in 2022 and a frenzy of activity among the world’s largest companies to implement AI.
But then there were Nokia, SunMicrosystem, IBM, Blackberry, Motorola,: that didn't immediately jump on the first AI train and are now desperately trying to catch up in different ways. Another key moment for them was 2010 when the top-of-the-line companies at the time didn't understand the great innovation brought by Apple's touch screens.
IBM for example, it was one of the first companies to explore artificial intelligence with the Watson project. It also chose not to invest in OpenAI, instead focusing on other areas such as cloud computing. However, despite its early investments, it failed to adequately capitalize on AI compared to more aggressive competitors and has gone through financial difficulties and restructuring over the years.
While not specifically AI-related, Nokia is another example of a company that failed to invest in an emerging technology, in this case the smartphone sector, and failed to compete effectively with Apple and Android. Nokia has also been hesitant to adopt advanced technologies, including AI, in its services and products, causing it to lose a lot of market share where it once was at the top. The company closed the second quarter of this year with a net loss of 142 million euros in the quarter while comparable profit was 328 million euros (-20%).
BlackBerry, like Nokia, dominated the smartphone market in the early days, but failed to invest in new technologies, including artificial intelligence, to improve the user experience and remain competitive. As a result, it lost its leading position and faced years of declining sales and revenue.
The cases of Google and Amazon
In addition to Intel, other large technology companies, such as Google and Amazon, have chosen not to invest directly in OpenAI, at least in the early stages, based on different business priorities, different investment strategies, or the desire to develop their own artificial intelligence (AI) solutions internally. Google, for example, has invested heavily in DeepMind and its AI projects, while Amazon has developed its own AI technologies such as Alexa and AWS services for machine learning.
