Intel, the dominant processor manufacturer, missed out on a huge opportunity almost two decades ago when it decided not to acquire Nvidia for $20 billion. At the time, it seemed like an expensive deal, but in hindsight, it is clear Intel made a costly mistake by not future-proofing itself in the graphics and AI industry. Nvidia is now worth $3.5 trillion (as of Oct 2024).
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Intel Ex-CEO Proposal to Buy NVIDIA
In 2005, Intel’s ex-CEO Paul Otellini pitched the idea of acquiring Nvidia to the company’s board of directors for a price of $20 billion. At the time, Nvidia was well known for its graphics processing units (GPUs), but the envisioned potential was in using those designs to power future data centres. Some Intel executives also felt Nvidia’s technology could be important for data centres going forward.
Intel’s Biggest Mistake – Declined to Acquire Nvidia
However, the board rejected the proposal, citing it as too expensive of an acquisition for Intel. Otellini then backed away from pushing the deal further. In hindsight, sources suggest this was a “fateful moment” as Nvidia went on to become a giant in the graphics and AI industry. Instead of acquiring Nvidia, Intel chose to focus on an internal graphics project called Larabee, which current CEO Pat Gelsinger leads. This project aimed to combine x86 technologies with graphics but ultimately failed.
Rise of Nvidia
Fast forward to today, Nvidia has a market capitalization of over $3.5 trillion, making it one of the most valuable companies in the world. Its success has been built on graphics technologies like CUDA and, more recently, taping into the AI boom with its GPUs widely used across multiple industries. If acquired by Intel, it’s hard to imagine Nvidia achieving the same level of dominance and valuation.
Intel Also Declined to Team Up With OpenAI
Besides passing on Nvidia, reports show Intel missed other opportunities in the AI sphere. In 2017-2018, startup OpenAI approached Intel to take a $1 billion stake (15% share). However, the chipmaker under ex-CEO Bob Swan declined as they didn’t see AI models scaling in a meaningful way. Today, OpenAI is valued at approximately $80 billion, meaning Intel’s investment would have grown over 12-fold.
Fall of Intel and Current Challenges
While Nvidia and AI flourished, Intel has struggled in recent times. Reported issues include delays in 7nm processors, losing its manufacturing lead and facing billions in losses from 10nm delays. The company has had to lay off thousands of employees and sell major assets to stay financially stable. Some of these failures stem from a lack of foresight and risk-taking attitude, according to analysts.
Moving Forward
Intel’s road ahead remains uncertain. It is attempting a turnaround with newer CEO Pat Gelsinger. However, obstacles persist, ranging from catching up in manufacturing to meaningful projects in graphics and AI. If only decisions from 2005 had turned out differently, Intel might have been the dominant force instead of fighting battles.
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