Intel Unveils 2 New AI Chips as Takeover Rumors Surface

Intel has unveiled two new artificial intelligence chips—the Xeon 6 CPU and Gaudi 3 AI accelerator—as part of its efforts to strengthen its data center business and compete with industry giants AMD and Nvidia. This announcement comes amid rumors of a potential takeover by Qualcomm and investment interest from Apollo Global Management.

Next-Generation AI Chips: Xeon 6 and Gaudi 3

The new Xeon 6 chip is designed with performance cores (P-cores) that deliver double the performance of its predecessor, making it ideal for AI and high-performance computing in edge and cloud systems. The Gaudi 3 AI accelerator is specifically built for generative AI applications and is set to compete directly with Nvidia’s H100 and AMD’s MI300X chips. IBM has already adopted the Gaudi 3 processors in its IBM Cloud to offer a lower total cost of ownership.

Demand for AI Drives Data Center Transformation

According to Justin Hotard, Intel’s Executive Vice President and General Manager of the Data Center Artificial Intelligence Group, the growing demand for AI is transforming the data center landscape. Intel aims to create an open ecosystem with the Xeon 6 and Gaudi 3 chips, enabling customers to manage their workloads with improved performance, efficiency, and security.

Intel’s Position in the GPU-Accelerated Server Market

Intel noted that 73% of GPU-accelerated servers use its Xeon chips as host CPUs. However, despite this dominance, Intel’s market position has been challenged by Nvidia, whose AI chips have become highly sought after, leading to a significant surge in Nvidia’s stock price.

Financial Struggles and Turnaround Efforts

Intel has faced significant challenges recently, reporting lower-than-expected earnings and cutting 15% of its workforce. CEO Pat Gelsinger is focused on revitalizing the company by developing more advanced chips for data centers and consumer PCs while expanding its manufacturing capabilities.

Global Expansion Plans on Hold

Intel's ambitions to expand its chip fabrication facilities globally have been put on hold, with plans for new plants in Europe and Malaysia delayed due to fluctuating chip demand. Despite these setbacks, Intel announced new partnerships, including custom chip production for Amazon, joining Microsoft as a prominent client in its third-party chip manufacturing business.

Potential Takeover and Market Shifts

Qualcomm has expressed interest in acquiring Intel to diversify beyond its core smartphone business and strengthen its presence in the data center and PC markets. However, it would take considerable effort for Qualcomm to compete with Intel’s established position in the PC chip market.

Restructuring for a Competitive Edge

To provide clearer separation and reassure potential clients, Intel is restructuring its operations by separating its foundry business from its chip design segment. This move is aimed at boosting customer confidence and enhancing Intel’s competitiveness in the market.

The Road Ahead for Intel

As Intel navigates its turnaround plan and contends with market pressures, the success of its new AI chips and strategic partnerships will be critical in determining its future. With competition from industry giants and potential takeovers looming, Intel’s ability to innovate and adapt will be put to the test.