Intel's Missed $1 Billion Bet on OpenAI Now Haunts Its Market Position

Seven years ago, Intel had the opportunity to invest in OpenAI but ultimately declined to do so, a decision that current reflections prove costly. Sources have revealed that in 2017 and 2018, Intel's executives contemplated a purchase of 15% of OpenAI's shares for $1 billion in cash. At that time, OpenAI was still a burgeoning non-profit research organization in the relatively obscure field of generative AI.
Despite discussions between the two companies' executives, including the potential for Intel to manufacture hardware for OpenAI at cost in exchange for an additional 15% stake, the deal was not finalized. A major factor for Intel's withdrawal was the skepticism of then-CEO Bob Swan, who believed that generative AI models would not achieve market penetration quickly enough for Intel to recoup its investment.
Intel's decision to pass on the opportunity with OpenAI, which has since launched the groundbreaking chatbot ChatGPT and now holds an approximately $80 billion valuation, is seen in retrospect as a significant missed opportunity. The reluctance of Intel's data center division to produce hardware at cost further compounded the situation. OpenAI's leaders were keen on Intel's investment as it would have reduced their dependency on Nvidia chips, allowing them to build their own infrastructure.
Today, Intel's market value has plummeted to around $108 billion, roughly equivalent to the skyrocketing valuation of OpenAI, underscoring the dramatic shift in market dynamics over the past several years. Intel has also found itself trailing behind competitors like Nvidia, now valued at $2.6 trillion, which capitalized on the AI revolution by developing GPUs integral for training and running large generative AI models.
Intel has faced multiple strategic missteps over the years, including declining Apple's offer to use Intel processors in the first iPhone in 2007. Former CEO Paul Otellini's decision to pass on that deal also marks another pivotal moment in Intel's history.
In summary, Intel's series of strategic decisions has led to a decline in its once-dominant market position, and its missed opportunity to invest in OpenAI exemplifies a broader pattern of caution that has left the company lagging in the AI race. The company's focus now includes ambitious plans for its AI development, particularly with the Gaudi AI chips anticipated to significantly enhance market performance.