Intel Decision to Pass on OpenAI Deal Has Significant Financial Impact

In 2017, Intel had the opportunity to acquire a 15% stake in OpenAI when it was still a non-profit research lab. However, the chipmaker opted not to pursue the $1 billion investment, a choice that could have had a significant impact on both companies' trajectories

Reuters reported that Intel considered buying a 15% stake in the non-profit organization for $1 billion in cash. 

However, the company decided against the move because then-CEO Bob Swan did not believe generative AI would be a market success in the near term. Therefore the company wouldn't be able to recoup its investment in the chipmaker.

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Just how costly was that decision? 

OpenAI would go on to switch to a capped profit structure in 2019 and partner with Microsoft before quickly becoming the darling of the tech industry following the release of ChatGPT in 2022, with its generative AI models sought after by businesses all over the globe.

To put things in perspective, Microsoft's expansion of its deal with OpenAI in February 2024 valued the company at more than $80 billion.

That would have made Intel's 15% stake in OpenAI worth $12 billion today — meanwhile, Intel has lost 58% of its value this year, with its current market value currently standing at just $83 billion.

Intel’s investment with OpenAI would have also provided the research lab with access to its hardware, reducing its reliance on Nvidia.

Related:Intel Shares Plummet to 50-Year Low Amid Massive Layoffs, Dividend Cuts

Instead, Nvidia would go on to become the hardware vendor of choice for companies developing AI after its success with OpenAI, in turn becoming the world’s most valuable company for a time. Meanwhile, Intel was left to see its shares drop to below $20.

News of Intel’s decision to pass on OpenAI is the latest in a series of challenges for the chipmaker. 

Its shares are at historic lows after traders reacted negatively to news the company was laying off 15% of its workforce, around 17,000 jobs, and facing at least two lawsuits over instability issues with its 13th and 14th-generation Raptor Lake CPUs.

Intel did have some good news this week. The company is on track to start production of its new AI PC client processor, Panther Lake and server processor, Clearwater Forest.