Intel has fallen far short of the success it aimed for with its Gaudi series accelerator chips in the artificial intelligence industry. While Nvidia and AMD’s rapid rise in this field draws attention, Intel’s Gaudi AI accelerators are having difficulty meeting market expectations. The company had to revise its $500 million revenue target for 2024 and has now officially announced that it will not be able to reach this figure. Intel CEO Pat Gelsinger confirmed this situation when announcing the company’s third quarter results, saying, “We will not be able to reach our 2024 target of $500 million that we expected from Gaudi.”
While the increase in chip demand in the AI market throughout 2023 led to significant revenue gains for competitors such as Nvidia and AMD, Intel’s revision of its AI revenue targets stood out as a notable development in the industry. While Nvidia is experiencing rapid growth with its AI-enabled graphics processors, AMD’s MI300 series accelerators have also gained strong traction in the market, generating an impressive quarterly revenue of $1 billion. However, although Intel launched the Gaudi 3 accelerator, it stated that the adoption rate of the product was not at the expected level and that software compatibility problems experienced during the transition contributed to this situation.
Despite Intel’s efforts to make a promising start to its Gaudi accelerators, technical issues during the transition made it difficult for the new product to make a strong impact on the market. While launching the Gaudi 3 accelerator, the company announced that the transition from the old Gaudi 2 model to the new model took longer than expected and that this process created additional difficulties, especially in software compatibility. Despite this, Gelsinger stated that there are great opportunities for Intel in the AI market and that they will continue to work to meet the increasing demand for solutions based on open standards and with lower total cost of ownership.
Intel is making structural changes for Gaudi
Although Intel experienced a 6 percent annual decrease in total revenue of $13.3 billion during the last quarter, this revenue increased compared to the previous quarter. However, the $18.5 billion cost and restructuring expenses announced due to the company’s restructuring process led to a net loss of $16.6 billion. These costs arise from the strategic decisions Intel makes in line with its goal of achieving a more profitable structure. Gelsinger announced that they made a series of structural changes to bring Intel to a more efficient and competitive position, and that the edge computing business unit was now integrated into the Client Computing Group, which is responsible for desktop and laptop processors.
The company’s core software teams are being integrated into main business units and moved to a more centralized structure in order to provide a more effective workforce. All these changes are expected to contribute to Intel narrowing its strategic priorities and increasing efficiency in major projects. Gelsinger stated that maximizing the value of the x86 processor architecture, especially in the customer, edge and data center areas, is one of the company’s primary goals.
These arrangements, made to increase the contribution of the Gaudi series to Intel’s future AI projects, signal that Intel will continue its efforts to create a permanent presence in the artificial intelligence sector, where competition with Nvidia and AMD is intensifying. As the company continues its effort to strengthen its AI strategy by targeting efficiency in large markets, it is being carefully monitored to what extent the technical infrastructure of Gaudi AI accelerators can support these goals in the future.