Intel's AI Chip Strategy Faces Challenges Amid Competitive Landscape

Intel: Partners Will Play 'Massive Role' In 2025 Gaudi 3 AI Chip Rollout

In an interview with CRN, Intel U.S. Channel Chief Michael Green admits that the rollout of the recently launched Gaudi 3 is a 'slow process' as the company scales up OEM support for the accelerator chip. 'It's a brand-new product that we're ramping. We have visions of making this a channel-available product in 2025,' he says. Intel U.S. Channel Chief Michael Green said channel partners will play a "massive role" in the rollout of the semiconductor giant's Gaudi 3 accelerator chip when it becomes a "channel-available product in 2025." Promised by Intel to enable more cost-effective AI systems than those using Nvidia GPUs, Gaudi 3 launched last month in servers from Dell Technologies and Supermicro. Hewlett Packard Enterprise is expected to follow with its own Gaudi 3 system in December. Intel has not yet said when servers from other vendors, including Lenovo, will arrive. [Related: Analysis: Intel's AI Chip Efforts Stall As AMD Gets A Boost Against Nvidia] In a recent interview with CRN, Michael Green, who became the head of Intel's new North America partner scale group this month, admitted that the rollout of Gaudi 3 is a "slow process" as the company scales up OEM support for a product line that was previously supported by only one OEM, Supermicro, with the predecessor chip. As a result, Intel's channel partners shouldn't expect to sell Gaudi 3 systems until next year. "We're already working, obviously, with the Dells and the Supermicros, really the Dells and the HPEs of the world, on making sure that it gets into partners' hands. But let's be honest: It's a slow process, right? It's a brand-new product that we're ramping. We have visions of making this a channel-available product in 2025," he said. "The channel plays a massive role in how do we take Gaudi 3 out to the masses," he added. "But if you go from Gaudi 2 where we had one OEM partner to now having four, it's massive progress. So then how do we take that and make it more applicable to the channel partners? In our strategy, it will just take a little bit of time." Beyond Intel's pitch for Gaudi 3 delivering a "price performance advantage" in AI systems, the chipmaker has said the chip will find favor with enterprises because of Intel's open ecosystem approach across hardware infrastructure, software platforms and applications. For software, this open approach means that partners and customers can choose from a variety of tools from different vendors to address every software need for an AI system, according to Intel. A key aspect of this approach is the Open Platform for Enterprise AI, a Linux Foundation group that is meant to serve as the foundation for microservices from different vendors that can be used for such systems. Green said Intel will play a "key role" in helping channel partners connect with ISVs to build out the necessary software stack for Gaudi 3 systems. "We need to be the leading voice and the leading aggregator of all these partners in ISVs, because collectively, this is where we'll actually see improvements on what's available to end users, what they can do from a cost-optimization standpoint," he said. Solution provider executives who spoke to CRN said Intel is on point with its plan to make a big push for Gaudi 3 in the channel, especially when demand for AI infrastructure and the need for alternatives to Nvidia GPUs remain high. But they weren't in agreement on how much of an opportunity Gaudi 3 could represent for Intel. "At the end of the day, the channel is an amazing vehicle to get things not only launched, but embedded and driven," said Bob Venero, CEO of Fort Lauderdale, Fla.-based Future Tech Enterprise, No. 76 on CRN's 2024 Solution Provider 500 list. "If history shows itself, we'll be able to make a big impact for them with the product." Venero thinks Intel's Gaudi 3 chip could make inroads with enterprises if the semiconductor giant makes an emphasis on how it could enable AI data centers with lower operational costs, such as energy, than those powered by Nvidia GPUs. "You look at companies that are trying to do AI farms and stuff, there's just not enough power or cooling to do it, and that's a big thing. So if I'm Intel, I'm driving that messaging on not just price but operational price," he said. The solution provider CEO said he thinks Intel could also benefit from its existing relationships in the enterprise world, but all of this rests on the chipmaker's ability to develop a program that will enable partners to sell Gaudi 3 systems. "You're not getting fired by putting Intel in your environment, right? So I think they'll have a lot of opportunity and growth, especially out of the gate once the partners are able to drive it and Intel helps build a program that allows them to drive it," Venero said. Alexey Stolyar, CTO of Northbrook, Ill.-based systems integrator International Computer Concepts, told CRN while he believes there is appetite for alternatives to AI systems powered by Nvidia systems, he's not yet sure how big of an opportunity is represents. While Stolyar said he is working on one Gaudi 3 project for a customer, customers are still mostly talking about Nvidia's latest GPUs, including the forthcoming Blackwell chips and their associated platforms, like the GB200 NVL72 rack-scale system. "It's not proportional yet," he said. Stolyar said the difficulty with selling AI infrastructure to enterprises is that they are typically slower than startups and hyperscalers when it comes to adopting new technologies, especially when the return on investment still isn't clear around AI. "Most of them don't know how to utilize it yet, don't know how to build the systems, don't know how to do anything with them yet, and there's a pretty big learning curve. Everyone wants to, but they're trying to figure out, what does that mean from a money perspective? How are they going to generate money from it?" he said. Dominic Daninger, vice president of engineering at Burnsville, Minn.-based Nor-Tech, told CRN that Intel's biggest challenge in getting the market to adopt Gaudi 3 is Nvidia's incumbency, especially in light of how the rival has expanded its software offerings. "It'll be a struggle because Nvidia has dominated it for so long and got so much software infrastructure there that people have adopted," he said. One thing that could help Intel, according to Daninger, is the fact that Supermicro has started to make Gaudi 3 systems available through its JumpStart program for remote testing. But the executive added that his company hasn't given much thought to selling Gaudi 3 systems yet because customers haven't asked about them. "We would if we saw any interest or demand," he said. A senior leader at a solution provider that is in the top 100 of CRN's Solution Provider 500 said that the channel will be a critical route to market for Intel's Gaudi 3 because that's how most enterprises buy IT infrastructure, and they will represent a larger opportunity than the smaller group of companies making mass purchases today. "That's where I think the impetus is on them to get us enabled, because we're going to be the ones moving the needle probably more so than they are," said the executive, who asked to not be named to speak candidly. But while the solution provider said Gaudi 3 could benefit from the need for more alternatives to Nvidia GPUs, he has observed that Intel's other rival, AMD, has been much more active in engaging with partners lately. "Their sellers are out with our sellers. They are trying to proactively win that affinity battle. And Intel's just been a little too lax in that that respect," said the executive, who added that Intel's massive job cuts have been a continued source of concern.

Analysis: Intel's AI Chip Efforts Stall As AMD Gets A Boost Against Nvidia

The fact that AMD in the past quarter managed to unleash new data center AI chips sales opportunities equal to the full-year revenue goal that Intel now expects to miss is yet another reflection of how far behind Intel is in creating a meaningful AI chip business. Intel said it will fall short of the modest revenue goal it set to gain a foothold in the Nvidia-dominated data center AI chip market -- a stark contrast from the upgraded sales forecast for such chips recently given by rival AMD. Pat Gelsinger, Intel's CEO, said during the chipmaker's third-quarter earnings call last Thursday that it will "not achieve our target of $500 million in revenue" for its Gaudi accelerator chips this year, blaming slower-than-expected sales on the "product transition" from Gaudi 2 to the recently launched Gaudi 3 as well as "software ease of use." [Related: AMD Says Instinct MI325X Bests Nvidia H200, Vows Huge Uplift With MI350] Despite the slowness, Gelsinger said he remains bullish on Intel's long-term Gaudi strategy, which rests on the idea that enterprises will seek out Gaudi chips for AI systems that are more cost-effective than Nvidia GPU-based systems for running smaller AI models. Among Gaudi 3's early adopters are IBM Cloud, which plans to launch Gaudi-based offerings in early 2025, and a reshaped Inflection AI, which is using Gaudi 3 compute from the recently rebranded Intel Tiber AI Cloud for a solution that may count Intel as a future customer. "There is clear need for solutions with superior [total cost of ownership] based on open standards, and we are continuing to enhance the Gaudi value proposition," Gelsinger said. This is not the kind of news Intel was hoping to give, especially given that its $500 million revenue goal for 2024 amounted to merely 2 percent of the data center compute revenue Nvidia made in the last quarter alone. Nvidia's data center compute revenue, which was $22.6 billion for the May-July period, largely came from GPUs like the H100 and H200. Meanwhile, AMD CEO Lisa Su said earlier last week that her company has upgraded its 2024 sales forecast for Instinct data center GPUs by $500 million to $5.5 billion. In AMD's third-quarter earnings call that day, Su said the upgraded forecast was based on the completion of "some important customer milestones" such as meeting reliability requirements in data centers and optimizing the chips on certain AI workloads. Two major customers that helped fuel Instinct sales in the third quarter were Microsoft and Meta, which both expanded their use of AMD's MI300X GPUs for internal workloads, including multiple Copilot services and other inferencing infrastructure. The company also saw the availability of MI300X public cloud instances expand among Microsoft, Oracle Cloud and smaller cloud providers while "multiple startups and industry leaders" such as Databricks and Essential AI drove "strong" adoption of such instances. However, AMD's $5.5 billion Instinct GPU forecast for 2024 is still a small fraction of what Nvidia makes from AI chips every quarter. But the fact that AMD in the past quarter managed to unleash new sales opportunities equal to the full-year revenue goal that Intel now expects to miss is yet another reflection of how far behind Intel is in creating a meaningful AI chip business. Intel may have fallen short of its small sales forecast, but top sales executives at the company recently indicated in interviews with CRN that it is still in the early stages of scaling up sales efforts for Gaudi 3. The company announced in September that the first Gaudi 3 systems will arrive in October from Dell Technologies and Supermicro. Hewlett Packard Enterprise is then expected to follow up with its own offering in December. System availability from other server vendors, including Lenovo, has not been disclosed. Michael Green, the head of Intel's new North America partner scale group and U.S. channel chief, admitted to CRN in an interview last month that the Gaudi 3 rollout is a "slow process" in part because the company is scaling up a product line that was previously supported by only one OEM, Supermicro, with the predecessor chip. "It's a brand-new product that we're ramping. We have visions of making this a channel-available product in 2025," he said, adding that Intel's channel partners will play a "massive role" in selling Gaudi 3 systems. An AMD executive, on the other hand, told CRN in June that the company was expected to make a greater emphasis on enabling channel partners to sell servers equipped with its Instinct chips in the second half of the year. "You'll see us shifting very hard to enable enterprise through multiple channels this year, including the channel," said Forrest Norrod, AMD's top data center executive, at the time. A senior leader at a solution provider that is in the top 100 of CRN's 2024 Solution Provider 500 list told CRN on Monday that there is a need for stronger competition against Nvidia because of long lead times for its GPUs combined with how the AI chip giant determines allocations. "There's an appetite out here, for sure, because we want some ability to get this in our customers' hands without having to wait nine months and go through that internal vetting system of essentially, 'Is your customer deemed worthy enough to get these GPUs from Nvidia?'" said the executive, who asked to not be named to speak candidly. The solution provider leader said Nvidia's customer vetting process, which determines when chips are allocated to customers, is "not enjoyable." (While an Nvidia spokesperson declined to comment on this complaint, Nvidia CEO Jensen Huang said in February that the AI chip giant does its "best to allocate fairly and to avoid allocating unnecessarily.") This situation portrayed by the solution provider executive means his company and his customers would be in a better place if there were one or two more AI chip suppliers. "There's an inherent need to get it out there," the solution provider executive said. But while the solution provider leader is glad both Intel and AMD have plans to get their AI chips in the hands of channel partners, the executive said the latter has a head start on the technology side and a more active presence on the selling side. "Their sellers are out with our sellers. They are trying to proactively win that affinity battle. And Intel's just been a little too lax in that that respect," said the executive, who added that Intel's massive job cuts have been a continued source of concern. In response to the solution provider executive's comments, an Intel spokesperson echoed what Gelsinger said about Gaudi 3's prospects in last week's earnings call. "Gaudi 3 benchmarks have been impressive, and we remain encouraged by the market opportunity available to us. We will continue to enhance the Gaudi value proposition given the clear need for solutions with superior TCO based on open standards," the representative said.

Intel Fails To Achieve Gaudi AI "$500 Million" Revenue Target, Showing Slacking Performance In The AI Segment

Intel's Gaudi AI accelerators haven't managed to hit its "modest" quarterly revenue, as Team Blue fails in attracting market interest. Team Blue's business in pretty much all segments, whether it is in the x86 markets or even the AI industry, isn't going too well since competitors have ramped up their solutions, giving Intel little to no chance of creating a clientele based similar to the likes of NVIDIA and AMD. In the recent Q3 2024 earnings, Intel's CEO Pat Gelsinger revealed (via The Verge) that the firm's Gaudi AI portfolio hasn't managed to meet revenue expectations at $500 million, which is indeed shocking, given that competitors like NVIDIA are eying towards a multi-billion dollar target. Intel's Pat Gelsinger claims that despite the launch of their newest Gaudi 3 AI accelerator, the firm has been unable to bring in business, mainly since the transition towards the newer platform has been quite slow, and the Gaudi 3 AI solution hasn't impressed customers to the extent that it leads to higher adoption rates. However, Intel remains confident with Gaudi, claiming that the market is in need of more cost-effective solutions that focus on an open-source environment. For those unaware, Intel has reported $13.284 billion in non-GAAP revenue, which has actually beaten out the general consensus, but the fallback in reaching the $500 million mark with Gaudi has questioned Intel's approach towards the AI markets. The firm is more focused towards catering to cost-efficient workloads, which is why the Gaudi 3 doesn't compete in raw performance with the likes of NVIDIA's Blackwell and AMD's MI300X solutions. Until now, Intel has yet to tap into the "high-end" segment of the AI markets, and considering the presence of competitors, it seems like Intel needs to make a huge impact. Things are expected to change with Intel's Falcon Shores architecture, which is said to employ TSMC's 3nm process and CoWoS packaging, right on the industry standards. Intel will eventually switch towards an external foundry for its AI business, which might prove to be massive for the firm, given that it is expected to come head-to-head with the likes of Team Green. It won't be wrong to say that Intel has a future in the markets, but the firm is still in "desperate needs" of a spark.

A year on, Intel's touted AI-chip deals have fallen short

(Reuters) - Intel's upbeat revenue projections on Thursday masked a sore point for the embattled company: chips touted for artificial intelligence have not lived up to sales expectations. The chipmaker scrapped its recent forecast that in 2024 it would sell more than $500 million worth of Gaudi accelerator chips, so called because they speed up the performance of AI applications. In a call with analysts, CEO Pat Gelsinger attributed their slower uptake to software related to Gaudi and a recent transition from the second to third generation of the chip. The disappointment underscores Intel's persistent AI travails, years after it declined to pick one strategy that could counter its skyrocketing rival Nvidia. It also shows challenges Intel has faced in delivering on a promise to investors. After the late 2022 launch of viral ChatGPT, powered by Nvidia GPUs, Gelsinger hoped Intel's AI chips could win new business. When teams at Intel predicted they could sell at most $500 million, Gelsinger told his executives the figure was not high enough, according to a Reuters special report published Tuesday. Intel had to project at least $1 billion when Nvidia's comparable sales were much higher, a source cited Gelsinger as saying. The company did so: in July 2023, Gelsinger touted a more than $1 billion "pipeline of opportunities" led by Gaudi. Intel at the time had not secured enough supply from the contract chipmaker TSMC to meet the target, two sources told Reuters. In an earlier statement, Intel said Gelsinger's comments reflected prospective deals accurately. "No company converts 100% of its pipeline into revenue," Intel said. "We make no apologies for setting ambitious internal targets for our teams - and we will always try to exceed the goals we set for ourselves." By January this year, Intel told investors more than $2 billion in AI-chip deals were possible. In April, Gelsinger said he expected over $500 million in such AI revenue in 2024. On Thursday, he said he scrapped the forecast. "Taking a longer-term view, we remain encouraged by the market available to us," Gelsinger said. Analysts did not mince words. Vivek Arya of Bank of America asked Gelsinger what business looked like for Intel if its CPU chips, or central processing units, became commoditized and "if there is no competitive AI product?" "What is Intel's AI strategy right now?" Arya asked. Gelsinger said CPUs are playing an increasing role in data centers for AI, and customers were showing "good early interest" in Gaudi. Benchmarks for the chip's third generation were impressive, he said. Overall, Intel reported third-quarter revenue of $13.3 billion, exceeding analysts' estimates. It posted a $16.6 billion loss attributable to the company, after impairment and restructuring charges. For Michael Ashley Schulman, chief investment officer of Running Point Capital, Intel's cost-cutting and high-growth focus showed it could rebound. But he had doubts. "The concern is that Pat Gelsinger may be exaggerating prospects and progress," Schulman said. Intel's CEO, he said, "may not have as tight of control on operational levers and customer fidelity as he needs." (Reporting by Jeffrey Dastin and Max Cherney in San Francisco; Arsheeya Bajwa in Bangalore; Editing by Sam Holmes)

Intel CEO Gelsinger: AI, Foundry Advances Will Foster Future Growth

'We have a lot more ahead, and we are acting with urgency to deliver on our priorities. We need to fight for every inch and execute better than ever before, and our teams are embracing this mindset as we build a leaner, more profitable Intel,' says Intel CEO Pat Gelsinger. Intel's business in its latest quarter exceeded its expectations with improvements being made at a modest pace as the AI PC and server business and Intel Foundry are expected to help propel growth going forward, CEO Pat Gelsinger said Thursday. Gelsinger, in his prepared remarks during Intel's third fiscal quarter 2024 financial analyst conference call, said that operationally, the Q3 results exceeded the company's expectations as it achieved key milestones across Intel foundry and Intel products. "Underlying trends in the business are improving at a measured pace, and our outlook for Q4 is modestly above current consensus," he said. [Related: Intel, AMD, Nvidia CEOs On The New x86 Partnership: 'Making Sure That x86 Remains x86'] Overall, Intel's business execution across the company is having a positive impact, Gelsinger said. "We have a lot more ahead, and we are acting with urgency to deliver on our priorities," he said. "We need to fight for every inch and execute better than ever before, and our teams are embracing this mindset as we build a leaner, more profitable Intel." Investors seemed to have liked Gelsinger's message. The company's stock, down during the day by 3.5 percent, rose by over 6 percent to $22.95 per share in after-hours trading a few hours after the close of the market Thursday. Big Changes Behind Intel completed the vast majority of its layoffs during the third fiscal quarter, and is on track to a greater than 15 percent workforce reduction by year-end, Gelsinger said. "These were hard but necessary changes that are reducing complexity and making us a leaner, faster, and more agile company," he said. Intel also reduced capital expenditures by over 20 percent relative to its plan from early 2024, helping to position the company to react quickly to market demand, Gelsinger said. "With our transition to EUV (extreme ultraviolet lithography) now complete, and the launch of Intel 18a on the horizon, we have a more normal cadence of new development at Intel 14aa and beyond," he said. "In addition, our teams are maniacally focused on improving fab productivity, allowing us to produce more with less over time." Intel has started simplifying and streamlining parts of its portfolio to unlock efficiencies and great value, and is re-establishing product portfolio leadership with a narrowed focus on fewer projects, with the top priority being to maximize the value of its x86 franchise across the client, edge, and data center markets, Gelsinger said. This includes moving its edge business into its Client Computing Group, focusing its NEX (networking and edge) portfolio on networking and telco, and integrating its software business into its core business units to foster more integrated solutions, he said. "The restructuring charges we took in Q3 were significant and necessary to right-size the company as we reduced spending by over $10 billion in 2025," he said. "There was also a sizable impairment, mostly related to Intel 7 equipment and space reflecting excess COVID-era spending that we have concluded cannot migrate to more advanced nodes now that we have fully transitioned to EUV processing." Overall, to meet its 2025 financial commitments, Intel plans to cut non-product costs of sales by $1 billion, lower opex to $17.5 billion, and drive gross and net capex, and as a result should see a positive free cash flow during the year, Gelsinger said. Intel's Product Business Intel's core x86 franchise and the ecosystems it has developed over the last three-plus years of investment remain a tangible source of value and differentiation for the company and its partners and customers, Gelsinger said. "Going forward, we are taking steps to supercharge and further unlock the value of our x86 franchise," he said. "We intend to drive new levels of customization, compatibility, and scalability needed to meet current and future demands of next generation computing, and we see this unlocking a range of meaningful opportunities across all our businesses. I am particularly excited about the recent announcement with AMD to create the x86 Ecosystem Advisory Group. We are bringing together leaders from across the ecosystem to help shape the future of x86 with a focus on simplifying software development, ensuring interoperability and interface consistency across vendors, and equipping developers with standardized architectural tools and guidelines." Founding members of that group also include Broadcom, Dell, Google, HPE, HP Inc., Lenovo, Meta, Microsoft Oracle, and Red Hat, he said. Progress On The AI Front Intel in September launched its Intel Core Ultra 200 V series processors, previously known as Lunar Lake, aimed at AI PCs, Gelsinger said. The company also continues to nurture a robust AI PC ecosystem with over 100 ISVs, 300 applications, and 500 AI models, and remains on track to ship over 100 million AI PCs accumulative by the end of 2025, he said. Intel this month launched Arrow Lake aimed at developing desktop AI PCs and bringing the NPU (neural processing unit) to the enthusiast desktop and workstation platforms, Gelsinger said. This will be followed in the second half of 2025 with the launch of Panther Lake, the company's first client CPU built on Intel 18a, he said. "Overall, we are making good progress at CCG [Client Computing Group]," he said. "Our share position is strong with a product roadmap and ecosystem that is increasingly setting us apart from our competition, especially in the enterprise market, as customers continue to see increasing value from our vPro solutions." Intel's data center and AI business, which is focused on delivering powerful AI systems to enterprise customers, also so several new launches, although Gelsinger said it still has a lot of work to do. This includes the launch of Intel's latest Xeon 6 processors which double the performance of the prior generation with increased core count, memory bandwidth, and embedded AI acceleration to target compute-intensive workflows, Gelsinger said. Intel this quarter also launched its Gaudi 3 AI accelerator, featuring twice the networking bandwidth at 1.5-times the memory bandwidth of its predecessor for large language model efficiency, Gelsinger said. IBM has already agreed to deploy Gaudi 3 as a service on IBM Cloud. "The overall uptake of Gaudi has been slower than we anticipated, as adoption rates were impacted by the product transition from Gaudi 2 to Gaudi 3, and software ease of use," he said. "As a result, we will not achieve our target of $500 million in revenue for Gaudi in 2024. That said, taking a longer term view, we remain encouraged by the market available to us. There is clear need for solutions with superior TCO (total cost of ownership) based on open standards, and we are continuing to enhance the Gaudi value proposition." Intel Foundry Intel is looking to disciplined execution of its product roadmap to return to process leadership, Gelsinger said. The company's upcoming Panther Lake and Clearwater Forest have met early Intel 18a milestones ahead of next year's launches, and the company has seen a material increase in the number of RFQs (requests for quotes) it is actively quoting, he said. "While we will not win them all, we are confident in our head-to-head position based on feedback from potential customers," he said. Intel recently unveiled a multi-year, multi-million-dollar commitment by AWS to expand its partnership to include a new custom Xeon 6 chip on Intel 3 and a new AI fabric chip on Intel 18a, Gelsinger said. Beyond AWS, the company in the third quarter added two additional 18a wafer design wins from compute-centric companies, he said. "We were also awarded an additional $3 billion in direct funding under the Secure Enclave program to produce semiconductors for the U.S. government," he said. "We are proud to be the U.S. government's partner of choice to fortify the domestic semiconductor supply chain and ensure the U.S. maintains its leadership in advanced manufacturing, micro electronic systems, and process technology." Intel's 3Q'24 By The Numbers For its fiscal third quarter 2024, which ended September 28, Intel reported total revenue of $13.28 billion, down 6.2 percent from the $14.16 billion the company reported for its third fiscal quarter 2023. Total revenue beat analyst expectations by $240 million, according to Seeking Alpha. That included revenue for its Client Computing Group of $7.33 billion, down from $7.87 billion. Within Client Computing Group, Intel reported desktop-related revenue of $2.07 billion, down from $2.75 billion; notebook-related revenue of $4.89 billion, up from $4.50 billion; and other revenue of $272 million, down from $611 million. Intel also reported data center and AI revenue of $3.35 billion, up from $3.08 billion, and network and edge revenue of $1.51 billion, up from $1.445 billion. Intel also reported Intel Foundry revenue of $4.35 billion, down from $4.73 billion. Other revenue, including from its Altera, Mobileye, and other businesses, was $1.04 billion, down from $1.45 billion. Intel also reported a GAAP net loss of $15.64 billion or $3.88 per share compared to last year's GAAP net income of $297 million or 7 cents per share. On a non-GAAP basis, Intel reported a net loss of $1.98 billion or 46 cents per share compared to last year's non-GAAP net income of $1.74 billion or 41 cents per share. Non-GAAP earnings was 43 cents per share lower than analyst expectations, according to Seeking Alpha. Looking ahead, Intel expects fourth fiscal quarter 2024 revenue of $13.3 billion to $14.3 billion, down from the $15.4 billion the company reported for its fourth fiscal quarter 2023. Intel also said it expects a GAAP loss of 24 cents per share, down from 63 cents per share, and non-GAAP earnings of 12 cents per share, down from 54 cents per share.

Intel's Gaudi AI chips are far behind Nvidia and AMD, won't even hit $500M goal

Nvidia made a fortune on the AI boom. AMD's rival AI chip became the fastest ramping product in its history, already pulling in $1 billion per quarter and inspiring AMD to remake itself as an AI company overall. But Intel, which suggested it would pull in $1 billion, even $2 billion on the back of AI in 2024, now says it won't even meet its more modest $500 million goal for its Gaudi AI accelerator this year. "We will not achieve our target of $500 million in revenue for Gaudi in 2024," CEO Pat Gelsinger just said on the company's Q3 2024 earnings call today. Though Intel just launched its recent Gaudi 3 accelerator this past quarter, said Gelsinger, "the overall uptake of Gaudi has been slower than we anticipated as adoption rates were impacted by the product transition from Gaudi 2 to Gaudi 3 and software ease of use." Despite the missed goal, Gelsinger says "we remain encouraged by the market available to us. There is clear need for solutions with superior [total cost of ownership] based on open standards, and we are continuing to enhance the Gaudi value proposition." Later on the call, Gelsinger seemingly had some sour grapes to share, pointing out how so far, the industry's huge spend on AI chips has been focused on training AI models in the cloud. "Training is creating the weather model, not using it," he says, suggesting once again that putting AI into all the chips, not just ones in the cloud, might be more important in the long run. Intel reported $13.3 billion in revenue in quarterly earnings today, down 6 percent year over year but up compared to last quarter -- and losses of a whopping $16.6 billion. But those losses were based on $18.5 billion of impairments and restructuring charges, the cost of Intel's decision to rework itself for more profitability in the future. Last quarter it announced a $10 billion cost reduction plan and over 15,000 layoffs, and it's now detailing some of the structural shifts inside the company too -- including moving its edge computing business into the Client Computing Group that generally handles its desktop and laptop chips, and integrating its software teams into the company's core business units. Gelsinger says Intel will "focus on fewer projects, with the top priority to be to maximize the value of our x86 franchise across the client, edge, and data center markets."

Intel Says It Won't Even Make $500M From Gaudi AI Chips In 2024 Despite Nvidia Minting Billions: CEO Gelsinger Says Uptake 'Slower Than We Anticipated' - Intel (NASDAQ:INTC), Advanced Micro Devices (NASDAQ:AMD)

Intel Corp. INTC has a Gaudi problem on its hands - the chipmaker revealed that its AI accelerator won't even make $500 million in 2024, falling short of CEO Pat Gelsinger's target of $1 billion to $2 billion. What Happened: Gelsinger revealed during Intel's third-quarter earnings call that the Gaudi AI accelerator program will fall short of revenue targets due to a transition from second to third generation. "The overall uptake of Gaudi has been slower than we anticipated as adoption rates were impacted by the product transition from Gaudi 2 to Gaudi 3 and software ease of use," Gelsinger said. "As a result, we will not achieve our target of 500 million in revenue for Gaudi in 2024. That said, taking a longer term view, we remain encouraged by the market available to us." Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. This comes at a critical time for Intel - the iconic chipmaker's stock is down nearly 55% in 2024 so far, which has drawn attention from rival Qualcomm Inc. QCOM, which is reportedly eyeing a takeover of Intel. While it is not clear if this will eventually materialize, it points to a weak phase that Intel is going through. Three of the biggest chip makers - Nvidia Corp. NVDA, Intel, and Advanced Micro Devices Inc. AMD - all have their respective data center business segments which have gained traction in 2023. See Also: Apple's iPhone 16 Powers Record Sales In Q3, Just Behind Samsung In Global Market Share Battle While Intel led in 2022, the company's data center revenue started declining in 2023, coinciding with Nvidia's rise. On the other hand, 2022 and 2023 were both lukewarm for AMD, but it started gathering pace in the fourth quarter of 2023. Here's how Nvidia, Intel, and AMD's data center business has performed since 2022. Source: Nvidia, Intel, and AMD | Nvidia's Q3 2024 results have not been announced yet. Nvidia Rides AI Boost: Unsurprisingly, Nvidia's stock has also massively benefited from its dominance in AI chips - the Jensen Huang-led company has risen to the top, dethroning Apple on multiple occasions to become the world's most valuable company by market capitalization. Nvidia's current market capitalization stands at $3.256 trillion, while Intel's is $92.73 billion and AMD's is $233.8 billion. Gelsinger maintained an optimistic outlook, saying "We remain encouraged by the market available to us. There is a clear need for solutions with superior [total cost of ownership] based on open standards, and we are continuing to enhance the Gaudi value proposition." For the quarter that just ended, Intel reported $13.28 billion in revenue, beating Street estimates of $13.02 billion. Price Action: Intel's shares were up 6.8% in premarket trading on Friday at $22.98, according to Benzinga Pro data. Nvidia's stock was up 1.1% at $134.27, while AMD stock was up 0.6% at $144.99. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Nvidia's AI Chips Eat Intel's Lunch: Here's How Much More You'd Have Made If You Invested $1,000 In Jensen Huang's Company Instead Of Intel In 2023 Photos courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs

Intel says it will miss its AI goals with Gaudi 3 -- unbaked software leaves Intel's $500 million AI goal unachievable as competitors rake in billions

Intel claims its Gaudi 3 accelerator for AI offers tangible performance improvements compared to its predecessors, and given its claimed advantages amid relatively low prices, Intel expected sales of these products to exceed half a billion dollars this year. However, as the new unit was formally launched in late September and the software was not fully baked, Intel said this week that this shipment milestone would be missed. Still, some Gaudi 3 accelerators will be available at IBM Cloud. "While the Gaudi3 benchmarks have been impressive, and we are pleased by our recent collaboration IBM to deploy Gaudi 3 as a service on IBM Cloud, the overall uptake of Gaudi has been slower than we anticipated, as adoption rates were impacted by the product transition from Gaudi 2 to Gaudi 3, and software ease of use," said Pat Gelsinger, chief executive of Intel, at the company's earnings call with analysts and investors. "As a result, we will not achieve our target of $500 million in revenue for Gaudi in 2024." Intel's Gaudi 3 relies on two interconnected chiplets housing 64 tensor processing cores, designed with a 256x256 matrix structure that uses FP32 accumulators and eight matrix engines using 256-bit wide vector capabilities. It also includes 96MB of internal SRAM cache, offering data transfer rates up to 19.2 TB/s. Additionally, Gaudi 3 has 24 networking interfaces running at 200 GbE and 14 media processors capable of handling video and image formats like H.265, H.264, JPEG, and VP9 for visual data processing. The chip has 128GB of HBM2E memory across eight stacks, delivering a high bandwidth of 3.67 TB/s. Compared to its predecessor, Gaudi 3 marks a substantial leap forward as Gaudi 2 contained only 24 tensor cores, two matrix engines, and 96GB of HBM2E memory. The new Gaudi 3 accelerator offers tangible performance advantages over Gaudi 2 and can even challenge Nvidia's H100 (at least when this GPU does not use sparsity) in some cases. What is no less important is that Gaudi 3 is significantly cheaper than the H100. Earlier this year, Intel disclosed that a kit featuring eight Gaudi 3 chips on a baseboard would be priced at $125,000, roughly $15,625 per chip. In comparison, an Nvidia H100 card is currently priced at $30,678, around two times higher. However, despite all the advantages that Gaudi 3 has, it looks like Intel's software was not exactly ready for prime time, which slowed down hardware purchases. Now, Intel expects Gaudi 3 sales to ramp up in 2025.

A year on, Intel's touted AI-chip deals have fallen short

Intel has canceled its $500 million sales forecast for Gaudi AI chips in 2024 due to slower adoption and technical issues. CEO Pat Gelsinger noted challenges but highlighted potential. The company still sees long-term opportunities in AI. Despite the setbacks, Intel's overall third-quarter revenue exceeded expectations, although the company reported significant losses.Intel's upbeat revenue projections on Thursday masked a sore point for the embattled company: chips touted for artificial intelligence have not lived up to sales expectations. The chipmaker scrapped its recent forecast that in 2024 it would sell more than $500 million worth of Gaudi accelerator chips, so called because they speed up the performance of AI applications. In a call with analysts, CEO Pat Gelsinger attributed their slower uptake to software related to Gaudi and a recent transition from the second to third generation of the chip. The disappointment underscores Intel's persistent AI travails, years after it declined to pick one strategy that could counter its skyrocketing rival Nvidia. It also shows challenges Intel has faced in delivering on a promise to investors. After the late 2022 launch of viral ChatGPT, powered by Nvidia GPUs, Gelsinger hoped Intel's AI chips could win new business. When teams at Intel predicted they could sell at most $500 million, Gelsinger told his executives the figure was not high enough, according to a Reuters special report published Tuesday. Intel had to project at least $1 billion when Nvidia's comparable sales were much higher, a source cited Gelsinger as saying. The company did so: in July 2023, Gelsinger touted a more than $1 billion "pipeline of opportunities" led by Gaudi. Intel at the time had not secured enough supply from the contract chipmaker TSMC to meet the target, two sources told Reuters. In an earlier statement, Intel said Gelsinger's comments reflected prospective deals accurately. "No company converts 100% of its pipeline into revenue," Intel said. "We make no apologies for setting ambitious internal targets for our teams - and we will always try to exceed the goals we set for ourselves." By January this year, Intel told investors more than $2 billion in AI-chip deals were possible. In April, Gelsinger said he expected over $500 million in such AI revenue in 2024. On Thursday, he said he scrapped the forecast. "Taking a longer-term view, we remain encouraged by the market available to us," Gelsinger said. Analysts did not mince words. Vivek Arya of Bank of America asked Gelsinger what business looked like for Intel if its CPU chips, or central processing units, became commoditized and "if there is no competitive AI product?" "What is Intel's AI strategy right now?" Arya asked. Gelsinger said CPUs are playing an increasing role in data centers for AI, and customers were showing "good early interest" in Gaudi. Benchmarks for the chip's third generation were impressive, he said. Overall, Intel reported third-quarter revenue of $13.3 billion, exceeding analysts' estimates. It posted a $16.6 billion loss attributable to the company, after impairment and restructuring charges. For Michael Ashley Schulman, chief investment officer of Running Point Capital, Intel's cost-cutting and high-growth focus showed it could rebound. But he had doubts. "The concern is that Pat Gelsinger may be exaggerating prospects and progress," Schulman said. Intel's CEO, he said, "may not have as tight of control on operational levers and customer fidelity as he needs."

A Year on, Intel's Touted AI-chip Deals Have Fallen Short

Intel's upbeat revenue projections on Thursday masked a sore point for the embattled company: chips touted for artificial intelligence have not lived up to sales expectations. The chipmaker scrapped its recent forecast that in 2024 it would sell more than $500 million worth of Gaudi accelerator chips, so called because they speed up the performance of AI applications. In a call with analysts, CEO Pat Gelsinger attributed their slower uptake to software related to Gaudi and a recent transition from the second to third generation of the chip. The disappointment underscores Intel's persistent AI travails, years after it declined to pick one strategy that could counter its skyrocketing rival Nvidia. It also shows challenges Intel has faced in delivering on a promise to investors.

Intel surprises Wall Street with solid earnings and revenue, but success in AI remains elusive - SiliconANGLE

Intel surprises Wall Street with solid earnings and revenue, but success in AI remains elusive Intel Corp. today delivered better-than-expected earnings results and issued guidance for the coming quarter that topped Wall Street's estimates. In the wake of the report, its stock made sharp gains, giving the beleaguered chipmaker a welcome boost following months of inner turmoil. The company reported third quarter earnings before certain costs such as stock compensation of 17 cents per share, far surpassing the analysts' consensus estimate, which had called for a loss of two cents per share. Revenue for the period declined 6% year-over-year to $13.28 billion, but it still came in ahead of the Street's $13.02 billion forecast. All told, Intel delivered a net loss of $16.99 billion in the quarter, much higher than the $310 million profit it recorded in the same period one year earlier. However, most of those losses were inevitable, with the chipmaker recognizing $2.8 billon in restructuring charges during the quarter, and $15.9 billion in impairment charges tied to the depreciation of the Intel 7 process node and payments to the now-independent Mobileye business unit. Investors were clearly willing to forgive those losses, linked to the company's ongoing reorganization, as Intel's stock quickly gained more than 6% in the extended trading session. Intel Chief Executive Pat Gelsinger told analysts on a conference call that the company is in the midst of the most fundamental reshaping of its business since it was established back in 1968. In an October 28 filing, Intel revealed that its board's audit and finance committee has approved new cost and capital reduction activities, including plans to cut its headcount by 16,500 employees and reduce its real estate footprint. The job cuts were first announced in August, and the process should be complete by the fourth quarter of 2025. "The momentum we are building across our product portfolio to maximize the value of our x86 franchise, combined with the strong interest Intel 18A is attracting from foundry customers, reflects the impact of our actions and the opportunities ahead," Gelsinger said in a statement. Intel has endured a spectacular decline in recent years, losing market share in key markets like personal computer and data center chips, and failing abysmally in its efforts to make inroads in artificial intelligence. As a result, Intel has been forced to rethink its entire business model, and recently revealed plans to spin off its foundry business as an independent subsidiary. By doing that, Intel can focus more on its core business of chip design and development, and the foundry unit can seek outside funding sources. The company is also seeking to make other changes, such as offloading a stake in its Altera chip unit, which makes specialized "programmable" processors that can provide faster performance than standard chips. The turmoil at Intel has not gone unnoticed, and vultures are reported to be waiting in the wings. In September, it was reported that rival chipmaker Qualcomm Inc. had reached out to Intel to discuss a possible takeover, or acquisition of some of its business units. Intel is said to have responded by engaging with advisors to defend itself against such moves. In today's report, Intel said its client computing group, which sells chips for PCs, delivered $7.33 billion in revenue, down 7% from a year earlier and below the Street's estimate of $7.39 billion. In a conference call, Intel's chief financial officer Dave Zinsner said customers have been drawing down inventories that were previously built up following supply shortages "We anticipate inventory normalization will continue through the first half of next year," he said on the call. Intel's data center and AI business segment did better, with sales there topping $3.35 billion, up 9% from a year earlier and above the Street's call for $3.17 billion in revenue. However, investors will be keenly aware that the bulk of the data center and AI business unit's sales were not related to AI chips. The company has been under pressure to try and make more of an impact on the rapidly growing AI industry, and Intel responded with the launch of its next-generation Gaudi AI accelerators during the quarter. In April, the company said it hoped to deliver $500 million in revenue from Gaudi in the second half of the year, but today it revealed that uptake of the new chips has been slower than expected. On the call, Gelsinger admitted that the company is "not going to achieve" that its $500 million target. Gelsinger also revealed his frustration over the U.S. government's delay in providing the company with funding promised under the Chips and Science Act. In March, the White House said it would give Intel up to $8.5 billion in funding to help it build out its foundry infrastructure in the U.S., but the company has not yet seen any of that cash. "I'm frustrated that it's been so slow to move forward," Gelsinger admitted. Despite its ongoing troubles, Intel seems to think the current quarter will be a bright spot. It offered a forecast of 12 cents per share in earnings and $13.3 billion to $14.3 billion in revenue. That's better than expected, with Wall Street analysts targeting earnings of just 8 cents per share on sales of $13.66 billion. Intel called for fiscal fourth-quarter adjusted earnings of 12 cents per share and revenue between $13.3 billion and $14.3 billion. Analysts had expected 8 cents in adjusted earnings per share and $13.66 billion in revenue. Although Intel will be encouraged by today's after-hours gain, it's no doubt keenly aware that its stock is still down 57% in the year-to-date, while the broader S&P 500 Index is up 20% in the same period.

Intel Q3 2024 Earnings: DCAI Saves The Day

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Intel has now announced its earnings for the third quarter of 2024, posting broadly encouraging results relative to Wall Street's consensus expectations. For the three months that ended on the 30th of September, Intel reported $13.284 billion in non-GAAP revenue, beating consensus expectations of $13.04 billion. Here is the actual performance of Intel's business segments in Q3 2024: The following chart compares the performance of Intel's two major segments - Data Center and AI (DCAI) and Client Computing Group (CCG) - with Wall Street's consensus expectations (sourced from here and here). Intel has been trying to tap the thematic AI tailwind by collaborating with IBM to deploy its bespoke Gaudi 3 AI accelerators as a service within IBM Cloud. This initiative aims to attract companies that are seeking to scale their AI workloads in a cost-effective manner. Moreover, Intel is bringing AI capabilities to personal computers (PCs) via its core ultra processors that now support around 100 software vendors and 300 AI models. Given the fact that Intel's DCAI segment has beaten Wall Street's consensus revenue expectations in Q3 2024, it seems the company is finally seeing dividends from the secular AI-focused tailwind. During the quarter, the company generated $4.1 billion in cash from its operations. Its cash and cash equivalents and short-term investments now stand at around $24 billion. Intel has reported Q3 2024 non-GAAP gross margin of 18 percent, which is down 27.8 points on an annual basis. Bear in mind that Intel had guided to a non-GAAP gross margin of 38 percent while reporting its earnings for Q2 2024. Finally, Intel earned -$0.46 in EPS (non-GAAP), missing consensus expectations of -$0.03. Here is the company's guidance for the fourth quarter of 2024: Intel Guidance Investors have reacted positively to the company's latest earnings release, with the stock currently up around 12 percent in after-hours trading. The strength in DCAI segment is currently countering weakness in Intel's gross margin. Of course, as we reported recently, Amazon has now emerged as the anchor customer for Intel's chip fabrication ambitions. In the first phase of their planned collaboration, the chipmaker will leverage its "Intel 3" process to build a custom Xeon 6 chip for Amazon's data center workloads. In the second phase, Intel will produce an "AI fabric chip" for Amazon's AWS on its 18A manufacturing process, which is compatible with TSMC's 2nm process and is expected to enter the commercial phase in 2025. Meanwhile, Intel is still waiting for the Biden Administration to start releasing the grants and loans that were promised under the CHIPS Act.

Intel Reports Third-Quarter Loss but Forecasts Q4 Revenue Above Estimates

(Reuters) - Intel reported a massive net loss on Thursday, weighed down by impairment and restructuring charges, but forecast fourth-quarter revenue above estimates. The company has largely missed out on a boom in investments in speedy, advanced AI chips for data centers as businesses double down on adopting generative AI technology - a market dominated by Nvidia, followed by rival AMD. Intel reported a net loss attributable to Intel of $16.6 billion for the third quarter, compared with a net profit attributable to Intel of about $300 million in the year-ago period. As one of the largest makers of PC chips, Intel has benefited as the rollout of on-device AI features and a fresh Windows update cycle have renewed demand for PCs after a years-long slump, helping the company surpass Wall Street's low expectations. The company expects revenue to be between $13.3 billion and $14.3 billion for the current quarter, the midpoint of which is above analysts' average estimate of $13.66 billion according to data compiled by LSEG. Analysts also expect demand for traditional server chips made by Intel - its mainstay data-center semiconductors - to pick up in the second half of the year after several quarters of soft demand as investment is funneled to AI chips. However, Intel's share of the PC and server CPU market is consistently threatened by AMD, which now boasts a market valuation larger than that of Intel and is also the closest competitor to market leader Nvidia in AI graphics processors. In an interview, Intel finance chief David Zinsner said the company planned $12 billion to $14 billion in capital spending in 2025. (Reporting by Arsheeya Bajwa in Bengaluru and Jeffrey Dastin and Max A. Cherney in San Francisco; Editing by Kenneth Li and Matthew Lewis)