Summary:
Amazon announced it would use Gaudi chips from Habana Labs in 2020, marking a significant AI milestone.
Intel's acquisition of Habana for $2 billion has been marked by failure and mismanagement.
Nvidia's valuation soared to $3.5 trillion, while Intel's dropped to $80 billion.
Most of Habana's original team left Intel post-acquisition, indicating a failure to integrate.
Intel's pursuit of multiple AI strategies led to its downfall and a shift in focus to Jaguar Shores.
In December 2020, Amazon announced it would use Gaudi chips from the Israeli startup Habana Labs to train its large language models (LLMs) in the cloud. This was seen as a significant step in the AI ecosystem, especially given that Intel, which had acquired Habana for $2 billion, touted it as a challenge to Nvidia's GPU dominance. Fast forward a few years, and Nvidia's valuation skyrocketed to $3.5 trillion, while Intel languished at a mere $80 billion.
Recent Developments
Intel's recent financial results were disappointing, and they announced that the next-generation Habana processor, Falcon Shores, received negative feedback and would not be marketed commercially. This follows the earlier announcement that Gaudi was unlikely to meet its $500 million revenue target by 2024, marking the failure of Habana Labs under Intel's ownership.
The Downfall of Habana Labs
Avigdor Willenz, the entrepreneurial genius behind Habana, has a history of successful exits, but this acquisition has turned into a rare misstep. By 2024, most of Habana's original team had left Intel, signaling a disintegration of the startup post-acquisition. Intel's attempts to integrate Habana into its structure proved ineffective, and the company struggled with managing multiple competing AI strategies.
Missed Opportunities
Despite initially recognizing AI as a key future market, Intel's reluctance to commit fully to a single strategy led to its downfall. After acquiring Nervana and failing to capitalize on its potential, Intel turned to Habana Labs, which had already developed a promising AI training processor. Yet, unlike Nvidia, which successfully integrated its acquisition of Mellanox, Habana floundered.
A Cautionary Tale
Insiders at Intel noted that the company's bureaucratic inefficiencies hindered decision-making, contrasting sharply with the agile environment at Habana. The simultaneous pursuit of different AI strategies, including the development of Ponte Vecchio, ultimately led to the discontinuation of both projects.
The Future of AI at Intel
Intel's future in AI now hinges on the development of Jaguar Shores, a new chip that aims to compete with Nvidia. However, experts believe that catching up will be a steep challenge given Nvidia's two-decade lead in refining its AI processors. Meanwhile, Willenz and his team have already moved on to new ventures in Tel Aviv, even as Habana's failure marks a significant lost opportunity for Intel and the Israeli tech ecosystem.
Intel commented on its future AI strategy, emphasizing the need to tailor solutions to customer challenges rather than adopting a one-size-fits-all approach. As for Falcon Shores, it will be used only for internal testing while the focus shifts to Jaguar Shores.
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