Intel has decided not to bring its highly anticipated Falcon Shores AI chip to market, instead opting to use it as an internal test chip. The company announced this strategic pivot during its fourth-quarter earnings call, where Intel co-CEO Michelle Johnston Holthaus outlined a new direction for their AI data center strategy. Rather than Falcon Shores, Intel will focus on developing Jaguar Shores, a system-level solution aimed at addressing AI data center needs more broadly at rack scale.
Intel faces significant challenges in the AI data center chip space, as competitors like AMD and Nvidia continue to gain traction. The decision to halt Falcon Shores marks a shift in Intel's approach, as it seeks to correct the course after several disappointing product launches and historic losses. Holthaus emphasized the necessity of simplifying Intel's roadmap and concentrating resources on solutions that directly address customer needs.
"One of the things that we’ve learned from Gaudi is, it’s not enough to just deliver the silicon," said Holthaus.
The Intel Gaudi 3 chip failed to meet expectations, with the company unable to achieve its goal of $500 million in sales due to software issues. This setback highlighted the need for a comprehensive approach to AI data center solutions. Holthaus explained that while Falcon Shores would be leveraged internally for system development, networking, and memory improvements, the true customer demand lies with Jaguar Shores.
"Falcon Shores will help us in that process of working on the system, networking, memory — all those component[s]," Holthaus remarked.
Despite these efforts, Intel's participation in the cloud-based AI data center market remains limited. Few major service providers beyond IBM have committed to using Intel chips, and the company is struggling to make a meaningful impact. Meanwhile, AMD expects to generate around $7 billion in AI chip revenue by 2025, and Nvidia could reach $195 billion in revenue by fiscal 2026, according to analysts.
Holthaus acknowledged these challenges but remained focused on meeting customer needs with efficient computing solutions.
"what customers really want is that full-scale rack solution, and so we’re able to get to that with Jaguar Shores," she stated.
Leave a Reply