(Bloomberg) — Intel is rolling out a new version of its artificial intelligence chip, aiming to challenge Nvidia Inc. in one of the fastest-growing parts of the semiconductor industry.
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The updated processor, called Gaudi 3, will be widely available in the third quarter, Intel said at a company event on Tuesday. The chip is designed to boost performance in two main areas: helping train AI systems — a process that involves bombarding them with data — and running the final software.
Growing demand for AI services has technology companies scrambling for so-called accelerator chips, but Nvidia has seen the most benefits. Intel CEO Pat Gelsinger said previous versions of Gaudi failed to achieve the market share gains Intel had hoped to achieve. The new model is expected to have a greater impact.
“They're a good competitor, but people want an alternative,” he said Tuesday of Nvidia. “The world needs more suppliers, and we are committed to providing that choice.”
Intel shares rose less than 1% to $38 as of 1:33pm in New York on Tuesday, reversing an earlier decline. They were down 24% this year through Monday's close.
Gelsinger declined to specify prices but said his chips would be “significantly lower” than the cost of current and future Nvidia chips. He said they would provide a “very good” total cost of ownership.
Challenging Nvidia won't be easy. The tremendous success of this company's H100 accelerator helped it double revenues and raise its market valuation to more than $2 trillion. And now Nvidia is looking to continue its progress with a just-announced chipset platform called Blackwell. The company said in March that systems based on this product will be available later this year.
Read more: Nvidia looks to expand AI dominance with new Blackwell chips
According to Intel's assessment, the Gaudi 3 will be faster and more power efficient than the H100. The chip maker claims it will train certain types of AI models 1.7 times faster and will be 1.5 times better at running software. Intel said the product will be roughly on par with Nvidia's newer H200, performing slightly better in some areas and slightly behind in others.
Intel, based in Santa Clara, California, said it cannot provide comparisons with Nvidia's upcoming Blackwell line until those products become available to the public. Intel's competitor is Advanced Micro Devices Inc. — its longtime rival in PC processors — is also heading into this space. It unveiled a lineup of accelerators called MI300 in December.
Intel's Gelsinger said he's not just trying to catch up with Nvidia. He expects AI to bring an even bigger windfall to the industry — especially as the technology spreads beyond its current focus in the data centers of companies like Microsoft Corp. and Alphabet Inc.'s Google. Personal computers, mobile phones, and networking equipment will require chips capable of handling AI tasks and providing users with instant feedback — something not always possible with remote server farms.
When Intel reported its fourth-quarter results in late January, Gelsinger said it was increasing supply of Gaudi to meet growing demands and that the company had a “pipeline” for 2024 that was “in excess of $2 billion and growing.” The broader market for corporate spending on generative AI equipment will increase from $40 billion in 2024 to $151 billion in 2027, Intel said, citing market research.
But this confirms the progress made by Nvidia. The company generated data center revenue of more than $47 billion during the 12 months ending in January. In the current fiscal year, this total will exceed $95 billion, according to analyst estimates.
(Updates with CEO comment begin in fourth paragraph.)
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