Intel is an iconic company and the Intel “Bong” is even more iconic. But Intel missed out on a substantial share of OpenAI.

According to Reuters (How chip giant Intel spurned OpenAI and fell behind the times, written by Max A. Cherney and available here), about seven years ago, the company had the chance to buy a stake in OpenAI, then a fledgling non-profit research organization working in a little-known field called generative artificial intelligence.

Over several months in 2017 and 2018, executives at the two companies discussed various options, including Intel buying a 15% stake for $1 billion in cash, three people with direct knowledge of those discussions said. They also discussed Intel taking an additional 15% stake in OpenAI if it made hardware for the startup at cost price.

That would have been 30% of the company for $1 billion, plus hardware at cost. While I don’t know what hardware costs would have been (and genAI hardware costs are expensive), I can still imagine it wouldn’t have added that much more.

Intel ultimately decided against a deal, partly because then-CEO Bob Swan did not think generative AI models would make it to market in the near future and thus repay the chipmaker’s investment, according to three of Reuters’ sources, who all requested anonymity to discuss confidential matters.

OpenAI was interested in an investment from Intel because it would have reduced their reliance on Nvidia’s chips and allowed the startup to build its own infrastructure, two of the people said. The deal reportedly also fell through because Intel’s data center unit did not want to make products at cost.

Intel’s decision not to invest in OpenAI, which went on to launch the groundbreaking ChatGPT in 2022 and is now reportedly valued at about $80 billion, has not previously been made public. Had Intel made that deal, their share of OpenAI could be valued as much as at least $24 billion. Intel missed out – big time!

Ouch.

Last week, Intel’s second-quarter earnings triggered a stock price decline of more than a quarter of its value in its worst trading day since 1974. That’s before a lot of you were even born!

For the first time in 30 years, the tech company is worth less than $100 billion. The erstwhile market kingpin – whose marketing slogan “Intel Inside” (accompanied by the three-second, five-note audio Intel “Bong”) long represented the gold standard of quality – is still struggling to get a blockbuster AI chip product to market.

While $100 billion is a lot to you and me, Intel is now dwarfed by $2.6 trillion rival Nvidia. (Side note: if Nvidia were a country and its value were equivalent to Gross Domestic Product (GDP), it would be the eighth largest GDP in the world, ahead of Russia, Canada, Italy, Brazil, Australia and more). Damn.

Not only that, but Intel is now less than half the $218 billion value of AMD. Less than half of a company whose product was once considered to be inferior to Intel chips.

While this is only tangentially related to legal tech, it illustrates just how much AI and generative AI is changing the dynamics for investment – even in the biggest, most established technology companies around.

When Intel missed out on a substantial share of OpenAI, the Intel “Bong” hit a sour note. Will generative AI make even an iconic tech company like Intel obsolete? We’ll see.

So, what do you think? Will generative AI shake up the tech landscape as we know it? Please share any comments you might have or if you’d like to know more about a particular topic.

Image created using GPT-4o’s Image Creator Powered by DALL-E, using the term “robot standing at the edge of a cliff looking at the abyss below”.

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