Intel has decided not to move forward with its AI accelerator known as Falcon Shores. Instead, the company is channeling its resources into developing Jaguar Shores, a new GPU aimed at AI inference and high-performance computing. During a recent earnings call, Intel’s interim co-CEO, Michelle Johnston Holthaus, shared that they can utilize their cutting-edge 18A manufacturing process for Jaguar Shores.
This pivot is critical for Intel as it seeks to make a mark in the AI market, where it hasn’t found much success yet. Its earlier chip, Gaudi, fell short of sales expectations, and Falcon Shores didn’t meet enterprise needs either. Holthaus emphasized that simply producing a chip isn’t enough anymore; they need to offer comprehensive solutions.
While Holthaus didn’t confirm a release date for Jaguar Shores, analysts believe it won’t arrive until after 2025. Initially envisioned as a hybrid CPU-GPU, Falcon Shores shifted to a GPU-only design and ultimately didn’t adhere to their new standards for rack-scale technology.
Analyst Alvin Nguyen pointed out that canceling an AI product line might seem extreme, but in a fast-growing market dominated by Nvidia, Intel needs to avoid missteps with new products.
Intel’s growth strategy hinges on closing the gap against Nvidia and AMD, the latter of which has been gaining traction in traditional data centers. Holthaus acknowledged the urgency to regain market share, stating, “We will be fighting for every socket in that business.” The Xeon processor aimed at traditional data centers has fared better, and the upcoming Diamond Rapids processor, expected in early 2026, is set to continue that trend.
In its financial report for the last quarter of 2024, Intel revealed a revenue drop to $14.3 billion, down 7% year-over-year. They exceeded analysts’ expectations for the quarter, but offered a revenue forecast for the current quarter that fell short. Intel anticipates earnings between $11.7 billion and $12.7 billion for the period ending in March.
Despite posting a loss of 3 cents per share, the results helped lift Intel’s stock by over 3% in after-hours trading. Interim co-CEO David Zinsner described the fourth quarter as positive, even after a tough year, as Intel finished its third consecutive year of declining revenue and saw its stock price drop by more than half.
The Intel board appointed Holthaus and Zinsner to lead temporarily after the resignation of Pat Gelsinger in December. Details on finding a permanent CEO remain undisclosed. Intel has faced difficulties adapting to the demand for chips supporting AI in hyperscale data centers. Last August, the company cut 15,000 jobs, or 15% of its workforce, and aimed to slash capital expenditures by $10 billion this year.
Intel’s foundry segment, now an independent subsidiary, has become a significant financial burden. The foundry is now open to third-party chip designers, including competitors, but executives recognize that attracting customers will take time. They expect to break even by 2027, mainly through manufacturing Intel’s chips. Holthaus pledged to leverage this foundry’s 18A process for Panther Lake, Intel’s next-gen mobile processor, scheduled for release in the latter half of the year.
However, she hasn’t confirmed whether they will use the foundry for Nova Lake, Panther Lake’s successor, expected in 2026. Intel also continues its partnership with Taiwan Semiconductor Manufacturing Co. for some products, given TSMC’s dominant position in the industry, accounting for over 60% of the global market.