Intel is effectively killing Falcon Shores, its next-generation GPU for high-performance computing and AI workloads.
The move comes as Intel tries to correct course after a number of disappointing product launches and historic losses, while competitors like AMD and Nvidia gain ground.
Intel co-CEO Michelle Johnston Holthaus said during the company’s fourth-quarter earnings call Thursday that Intel will “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 tempered expectations for Falcon Shores last month, when she implied that it was an “iterative” step over the company’s previous dedicated AI data center chip, Gaudi 3.
“One of the things that we’ve learned from Gaudi is, it’s not enough to just deliver the silicon,” Holthaus said during Thursday’s earnings call. “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.”
Gaudi 3 is widely seen as a miss for Intel. In November, the company said it would be unable to meet its goal of $500 million in Gaudi 3 sales due to software-related issues. Today, few major service providers beyond IBM have committed to using the chip.
Intel faces an uphill battle in the AI data center chip space. Rival AMD expects to make around $7 billion in AI chip revenue in 2025, while Nvidia, the incumbent to beat, could hit $195 billion in revenue in fiscal 2026, according to some analysts.
“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,” Holthaus said. “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.”
