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Intel won’t obtain its Falcon Shores AI chip to market

The action comes as rivals like AMD and Nvidia gain ground and Intel attempts to turn around following a string of underwhelming product launches and record losses.

Michelle Johnston Holthaus, co-CEO of Intel, stated on Thursday during the company’s fourth-quarter earnings call 

“leverage Falcon Shores as an internal test chip, without bringing it to market.”

“AI data center … is an attractive market for us,” Holthaus said during the call. “[B]ut I am not happy with where we are today. We’re not yet participating in the cloud-based AI data center market in a meaningful way … One of the immediate actions I have taken is to simplify our roadmap and concentrate our resources.”

The focus instead will be on Jaguar Shores, which Holthaus called Intel’s opportunity to “develop a system-level solution at rack scale … to address the AI data center more broadly.”

 Holthaus stated during the Thursday’s earnings call

“One of the things that we’ve learned from Gaudi is, it’s not enough to just deliver the silicon,”. “Falcon Shores will help us in that process of working on the system, networking, memory — all those component[s]. But what customers really want is that full-scale rack solution, and so we’re able to get to that with Jaguar Shores.”

Many people believe that Gaudi 3 was a failure for Intel. The business announced in November that software problems would prevent it from reaching its $500 million Gaudi 3 sales target. Apart from IBM, not many significant service providers have made the commitment to use the chip as of yet.

In the market for AI data center chips, Intel has a difficult time competing. According to some analysts, Nvidia, the incumbent to beat, might reach $195 billion in revenue in fiscal 2026, while rival AMD anticipates making about $7 billion in revenue from AI chips in 2025.

Holthaus said

“As I think about our AI opportunity, my focus is on the problems our customers are trying to solve, most notably the need to lower the cost and increase the efficiency of compute,”. “As such, a one-size-fits-all approach will not work, and I can see clear opportunities to leverage our core assets in new ways to drive the most compelling total cost of ownership across the continuum.”

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