Intel’s Missed Opportunity: Skipping $1 Billion Stake in OpenAI Seven Years Ago

Intel once had the chance to secure a significant stake in OpenAI, a decision that could have drastically altered its position in the burgeoning AI market, but passed up the opportunity based on near-term projections.

Back in 2017 and 2018, Intel’s executives mulled over various collaborative strategies with OpenAI, including the option to acquire a 15% stake in the AI innovator for $1 billion. Additional discussions hinted at Intel possibly doubling this stake if it agreed to supply hardware to OpenAI at cost, according to a Reuters report citing four sources.

At the helm during this crucial decision-making period was then-CEO Bob Swan, who was skeptical about the commercial viability of generative AI technologies in the foreseeable future. Swan’s hesitance was based on a belief that the AI models wouldn’t hit the market soon enough to justify the investment for Intel’s desired timeline.

Fast forward to the present, and OpenAI’s valuation has soared to an estimated $80 billion. The stake Intel considered is now worth around $12 billion, and it would have positioned the tech giant at the forefront of AI development, a sector experiencing explosive growth due to advancements in generative AI.

OpenAI’s intent in seeking investment was to lessen its dependence on Nvidia’s hardware by developing its infrastructure. This missed partnership has left OpenAI still heavily reliant on external investment for designing and manufacturing AI acceleration hardware.

Intel’s decision not to invest might also have indirectly contributed to OpenAI’s current financial burden. Reports suggest that running ChatGPT costs OpenAI approximately $700,000 daily, primarily due to the expenses associated with Nvidia’s AI servers. Intel’s support could have enabled OpenAI to mitigate these costs by developing its hardware solutions.

This scenario underscores a pattern of missed opportunities for Intel, which has faced numerous strategic missteps over the last decade. Intel’s choice not to develop chips for the iPhone was another significant oversight. Under the leadership of current CEO Pat Gelsinger, Intel has struggled with additional challenges, including CPU issues, layoffs, canceled dividends, and production difficulties, signaling a tumultuous period for what was once a dominant force in the tech industry.

Intel’s series of strategic errors highlights the importance of visionary leadership and the risks associated with conservative decision-making in fast-evolving tech landscapes. As the AI sector continues to advance, Intel’s past decisions serve as a cautionary tale about the potential costs of underestimating emerging technologies.