Intel announced an upcoming AI chip claiming superior cost and thermal efficiency versus NVIDIA and AMD offerings.

Intel plans to ship an AI chip by the end of this year that uses cheaper memory and cooling technology than rival offerings from Nvidia and AMD. The company's new "Crescent Island" graphics processing unit is designed to speed up "inference" tasks, the stage when a user makes their request, rather than the training of models, an area where Nvidia's processors are dominant. Kevork Kechichian, who leads Intel's data center group, told the FT that the company is "starting with the basics" as it tries to challenge its rivals in the booming market for semiconductors that power AI. He added that the new chip would start shipping in limited quantities to customers by the end of this year, following an 18-month development process. This strategy represents a deliberate shift from Intel's earlier attempt at building a GPU for training AI models called "Gaudi," which saw poor sales and whose planned successor was cancelled last year.

Intel is leveraging two key constraints encountered by Nvidia and AMD: the need to incorporate expensive high-bandwidth memory and liquid-cooling infrastructure. Crescent Island is an air-cooled chip that uses LPDDR5 memory, a significantly cheaper type of memory than the HBM used in chips such as Nvidia's Blackwell. Kechichian stated that Intel was "not particularly aiming for [the training market] based on past experience" and instead focused on the inference market where these cost advantages could prove decisive.

This effort marks Intel's first significant push into the lucrative AI infrastructure market under chief executive Lip-Bu Tan, who took over last year after Pat Gelsinger was ousted amid concerns that his turnaround strategy was failing. Intel's new GPU was first unveiled in October as part of Tan's broader effort to revive a product line-up that had allowed Nvidia to dominate the market. Investors have welcomed the leadership change, after which Tan moved to cut costs and rein in spending on some manufacturing projects. Intel's shares are up more than 200 percent since the start of this year, part of a broader rally in semiconductor stocks driven by enthusiasm for AI.

Kechichian said Intel hoped to build the new chip in-house, another move that would ultimately make it cheaper than those offered by rivals who rely on TSMC. "For all data center products we are moving aggressively into our own foundry," he said. "That's the intent in general." The company is also assessing whether a version of the chip could potentially be sold in China in compliance with US export controls, as Nvidia and AMD's AI chip sales to the Asian nation have been blocked by trade tensions. "There are tiers of [the chip] that might be OK there… and we'll confirm that over time: clearly there is demand for that particular price point in that particular market," Kechichian said. These moves follow August's announcement that the US government would take a 10 percent stake in the company over time.