Chip maker Intel released a positive revenue forecast on Thursday, but concealed a crisis of its own. Intel failed to meet expectations this year in terms of sales of artificial intelligence or AI chips. The company expected to generate more than $500 million in revenue by 2024 with the 'Gaudi Accelerator' chip. However, Intel recently canceled this prediction. The chips help boost the performance of artificial intelligence applications.
CEO Pat Gelsinger explained the slow pace of chip sales to analysts. He blamed the slow pace of chip sales on software-related issues and the shift from the second to third generation of chips.
Intel released its earnings forecast last Thursday. Intel's share price has fallen more than 50 percent since the start of the year, although the stock price rose 5 percent at the start of the day on Friday after this forecast. This means that Intel is lagging behind in artificial intelligence technology and the company is facing problems in restructuring.
The Gaudy chip sales numbers highlight Intel's long-term AI woes. It also reveals the challenges Intel faces in meeting its investor commitments.
Gelsinger hopes that Intel's artificial intelligence chips will attract businesses after ChatGPT unveils in late 2022.
At the time, Intel's teams predicted that they could sell at most $500 million. But then Gelsinger told his executives that this number was not enough. Intel needs to set a sales target of at least $1 billion. Because the chip maker sells more chips than Nvidia.
For this, the company created various business opportunities to achieve the target in July 2023.
At the time, Intel was unable to secure enough supply from contract chipmaker TSMC to meet targets, Reuters reported.
Intel says, 'No company can convert 100 percent of its potential projects into revenue. We do not regret setting ambitious internal targets for our team and we will always strive to exceed our own targets.'
In January this year, Intel told investors that a deal worth more than $2 billion was possible for its artificial intelligence chip. In April, Gelsinger said he expects such revenue to exceed $500 million by 2024. But on Thursday, he canceled this forecast.
Regarding Intel's current strategy, Pat Gelsinger said demand for CPUs for AI data centers is growing and customers are showing “quite an interest” in Gaudí chips. He also said that the company's third-generation chips are more powerful.
In its third-quarter earnings report, Intel earned $13.3 billion, beating analysts' estimates. However, the company incurred a loss of 16.6 billion dollars due to various costs including restructuring.
Apart from this, there are rumors that Apple will buy Intel.
