Intel needs another era of profitability — So it's dropping $2B on a chip company
Multi-generational success is rare... The Celtics, Yankees, and Jedi all achieved it. Intel's sound logo reminded us during every commercial that Intel was inside our computers. But as PC sales disappeared, Intel is searching for its second wave of profits. So it just swiped its corporate card for a $2B acquisition of Israeli startup Habana Labs.
- 2016: Habana hid in "stealth mode" for 2 years, attracting $120M from venture capital to fund under-the-radar research and development.
- 2018: Habana unveiled Goya, a chip that processes almost 4x faster than NVIDIA, the market leader.
- Right now: Habana's spearheading Intel's efforts to power data centers with fancy machine learning (more on those below).
Machines can learn... courtesy of chips made of silicon. As the world puts all its computer files on Google Drive, iCloud, and Amazon Web Services, tech companies need to organize that data ASAP. Picture this: Search "dog" in your photos folder:
- The results are actually the pictures you took of dogs.
- Your phone's software learned that a 4-legged object with a sloppy tongue who's always smiling is a dog.
- Intel thinks this type of artificial intelligence powering will become a $25B industry by 2024.
Intel's acquiring instead of building... because its last DIY job was a disaster. In 2016, Apple selected Intel as its go-to iPhone chip-maker. When it was time to upgrade to 5G (aka right now), Intel couldn't deliver, so Apple switched to rival Qualcomm. After investing $16B in its smartphone division, Intel had to sell it away for only $1B to Apple. This time, it's acquiring so it can move faster. That Apple loss still burns Intel's RAM.