If Intel had made just one investment, the company's struggling fortunes might have been different.
Reuters reported in 2017 and 2018 that Intel had the opportunity to buy a 15% stake in OpenAI for $1 billion, citing four people with direct knowledge of the discussions. Intel could have also gotten an additional 15% if it provided OpenAI with its hardware at cost, according to two of the people.
OpenAI attracted Intel as an investor because it would reduce the company's reliance on Nvidia, the go-to chip supplier for AI.
But Intel walked away from the deal, in part because it believed generative AI models would not become widespread in the near future, leaving it unable to recoup its investment, according to three of the sources interviewed by Reuters.
An Intel spokesman declined to comment to Fortune.
Since then, Intel has struggled to gain a foothold in the turbulent AI sector, and its stock price has plummeted, losing 58% of its value this year alone. Meanwhile, OpenAI has led the market since releasing its popular AI chatbot, ChatGPT, in 2022. Intel's market capitalization of $84 billion, which suffered its worst stock price drop in the past 50 years last week, is roughly equivalent to OpenAI's latest valuation of $80 billion.
Two decades ago, Intel was one of the world's most important chipmakers, but it failed to capitalize on the AI boom that turned rival Nvidia into one of the world's most valuable companies.
According to Reuters, Intel has long focused its resources on enabling AI processing in the CPUs that power laptops and desktops, deprioritizing GPUs, the graphics chips used in games, because GPUs can more efficiently handle the myriad calculations required for AI. In contrast, rivals such as NVIDIA and Advanced Micro Devices (AMD) have had success with GPUs, but Intel has missed out big time. In the third quarter, Intel is set to release its Gaudi 3 AI chip, which CEO Pat Gelsinger said will be able to beat NVIDIA's H100 GPU.
Intel's profits last week fell far short of analysts' expectations, its shares fell 26% in a day, and its market capitalization fell below $100 billion for the first time in 30 years. Mr. Gelsinger told employees last week that the company would cut 15% of its workforce, or about 15,000 jobs, as part of a major cost-cutting effort.
“Simply put, we must align our cost structure to our new business model and fundamentally change how we operate our business,” Gelsinger wrote in the memo.
Intel's decision to decline to invest in OpenAI reflects other opportunities missed by giant companies that failed to see the future clearly. In 2000, Blockbuster famously turned down a $50 million offer to buy upstart Netflix; the streaming company is worth more than $250 billion today. During the tech boom of the late '90s, Yahoo turned down an offer to buy Google for $1 million.
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