When Intel ‘decided’ Nvidia is not worth spending $20 billion on – Times of India

A fateful boardroom decision in 2005 saw Intel pass up the opportunity to acquire Nvidia for $20 billion, a move that would prove costly as Nvidia later became the dominant force in artificial intelligence chips, the New York Times reported.
Then-CEO Paul Otellini presented the acquisition proposal to Intel’s board of directors, with some executives believing graphics chip designs could play a crucial role in data centres.The board rejected the idea, citing Intel’s poor track record of integrating acquired companies and the unprecedented price tag, according to people familiar with the confidential meeting.
Today, Nvidia’s market value exceeds $3 trillion, while Intel’s has fallen below $100 billion. The company that once dominated Silicon Valley’s chip industry is now getting “no lift from the A.I. gold rush,” the Times noted.

Intel ditched Nvidia for an internal graphics chip project

After rejecting the Nvidia purchase, Intel pursued an internal project called Larrabee, led by current CEO Patrick Gelsinger. The four-year effort to create a hybrid graphics chip using Intel’s PC-style design consumed hundreds of millions of dollars before being cancelled in 2009 due to lagging performance.
“I believed in it,” Gelsinger told the Times in a recent interview. “Had Intel kept at it, I think the world would be very different today.”
Intel made subsequent attempts to enter the AI chip market, including purchasing Nervana Systems for $400 million in 2016 and Habana Labs for $2 billion in 2019. However, these investments failed to secure Intel a significant position in the AI chip market.
The company’s latest AI chip, Gaudi 3, is marketed as a lower-cost alternative to Nvidia’s products. However, Gelsinger acknowledges Intel won’t compete with Nvidia in high-end AI systems anytime soon, telling a recent Deutsche Bank conference, “In that race, they are so far ahead… we’re just not going to be competing anytime soon.”
The missed opportunity has contributed to speculation among tech companies and investment bankers about what was once unthinkable: that Intel could become an acquisition target itself.