OpenAI sought Intel’s investment 7 years ago but this decision changed AI race

For US chip giant Intel, the darling of the computer age before it fell on harder times in the AI era, things might have been quite different.

About seven years ago, the company had the chance to buy a stake in OpenAI, then a fledgling non-profit research organization working in a little-known field called generative artificial intelligence, four people with direct knowledge of those discussions told Reuters.

Over several months in 2017 and 2018, executives at the two companies discussed various options, including Intel buying a 15% stake for $1 billion in cash, three of the people said. They also discussed Intel taking an additional 15% stake in OpenAI if it made hardware for the startup at cost price, two people said.

Read more: Will there be a recession in US? JPMorgan says 35% possibility by end of 2024

Intel (INTC.O), opens new tab ultimately decided against a deal, partly because then-CEO Bob Swan did not think generative AI models would make it to market in the near future and thus repay the chipmaker’s investment, according to three of the sources, who all requested anonymity to discuss confidential matters.

OpenAI was interested in an investment from Intel because it would have reduced their reliance on Nvidia’s chips and allowed the startup to build its own infrastructure, two of the people said. The deal also fell through because Intel’s data center unit did not want to make products at cost, the people added.

An Intel spokesperson did not address questions about the potential deal. Swan did not respond to a request for comment and OpenAI declined to comment.

From a long-feared wobble for AI shares, to why your digital assistant might sound strangely like Awkwafina, this is AI Weekly.

Intel’s decision not to invest in OpenAI, which went on to launch the groundbreaking ChatGPT in 2022 and is now reportedly valued at about $80 billion, has not previously been made public.

It is among a series of strategic misfortunes that have seen the company, which was at the cutting edge of computer chips in the 1990s and 2000s, stumble in the era of AI, according to Reuters interviews with nine people familiar with the matter including former Intel executives and industry experts.

Last week, Intel’s second-quarter earnings triggered a stock price decline of more than a quarter of its value in its worst trading day since 1974.

For the first time in 30 years, the tech company is worth less than $100 billion. The erstwhile market kingpin – whose marketing slogan “Intel Inside” long represented the gold standard of quality – is still struggling to get a blockbuster AI chip product to market.

Intel is now dwarfed by $2.6 trillion rival Nvidia (NVDA.O), opens new tab, which has pivoted from video game graphics to AI chips needed to build, train and operate large generative AI systems like OpenAI’s GPT4 and Meta Platforms’ (META.O), opens new tab Llama models. Intel has also fallen behind the $218 billion AMD (AMD.O), opens new tab.

Read more: Ola may enter quick commerce sector to compete with Blinkit and Zepto? ‘Future roadmap is…’

Asked about its AI progress, the Intel spokesperson referred to recent comments by CEO Pat Gelsinger, who said the company’s third-generation Gaudi AI chip, which it aims to launch in the third quarter of this year, would outperform rivals.

Gelsinger said the company had “20-plus” customers for the second and third generation of Gaudi and that its next-generation Falcon Shores AI chip would launch in late 2025.

“We are nearing the completion of a historic pace of design and process technology innovation, and we are encouraged by the product pipeline we’re building to capture a greater share of the AI market going forward,” the spokesperson told Reuters.