Intel, while pivoting to AI, tries to protect lead INTEL CORP

The computers in modern data centres — the engine rooms of the digital economy — are powered mainly by Intel chips. They animate the computing clouds of the internet giants and corporate data centres worldwide.

But Intel is now facing new competitive forces that could pose a challenge to its data-center dominance and profitability.

In particular, the rise of artificial intelligence is creating demand for new computing hardware tailored to handle vast amounts of unruly data and complex machine-learning software — and Intel’s generalpurpose chips are not yet tuned for the most demanding tasks. Instead, specialised chips are delivering better performance on artificial intelligence programs that identify images, recognise speech and translate languages.

Intel is hurrying to catch the AI wave. On Tuesday, to deal with the changing competitive landscape, the Silicon Valley giant is presented its newest data-center strategy at an event in New York, addressing its AI plans and its mainstream data-center business. The company has billed the event as its “biggest data-centre launch in a decade.”

How successful Intel’s efforts prove to be will be crucial not only for the company but also for the long-term future of the computer chip industry.

“We’re seeing a lot more competition in the data-center market than we’ve seen in a long time,” said Linley Gwennap, a semiconductor Revenue Net income ($mn) expert who leads a technology research firm in Mountain View, Calif.

Intel has long dominated the business for central processing chips that control industry-standard servers in data centers. Matthew Eastwood, an analyst at IDC, said the company controlled about 96 per cent of such chips.

But others are making inroads into advanced data centers. Nvidia, a chip maker in Santa Clara, Calif., does not make Intel-style central processors. But its graphics-processing chips, used by gamers in turbocharged personal computers, have proved well suited for AI tasks. Nvidia’s data-center business is taking off, with the company’s sales surging and its stock price nearly tripling in the last year.

Big Intel customers like Google, Microsoft and Amazon are also working on chip designs. AMD and ARM, which make central processing chips like Intel, are edging into the data-centre market, too. IBM made its Power chip technology open source a few years ago, and Google and others are designing prototypes. The company formally introduced the next generation of its Xeon data-center microprocessors, code-named Skylake.