Chipmaker Intel (INTC -2.40%) has a mixed track record when it comes to making acquisitions. In the past, it has spent billions on companies with dubious strategic benefit to the company, which was the case with its 2011 acquisition of anti-virus software maker McAfee.
Image source: Intel.
Other times, Intel's good strategic bets, such as with its acquisition of Infineon's wireless assets, had a tough time being properly integrated into the business. Those difficulties have occasionally led to lost opportunities, with Intel's high-profile failure to break into the smartphone applications processor market being one of them.
And, sometimes, Intel has made legitimately good buys, such as with its acquisition of QLogic's InfiniBand assets, which served as the foundation for the company's reasonably successful OmniPath interconnect fabric.
In this column, I'd like to go over two recent Intel acquisitions that have the potential to help improve Intel's competitive positioning and ultimately boost its business.
A processor technology purchase
Intel builds some of the world's best central processing units, or CPUs. CPUs are at the heart of virtually every market segment that Intel is in, from notebook computers to high-performance data centers.
However, in recent years, the pace at which Intel has introduced new processor core designs has slowed substantially. On top of that, the improvements it has made generation over generation haven't been awe-inspiring -- they've been on the order of 5%-10% per generation.
Image source: Intel.
Intel seems to want to remedy that problem, and to that end, it bought a start-up called Soft Machines for a reported $250 million.
Soft Machines claimed that its processor technology could deliver a quantum leap in both performance and efficiency over the best processor designs in the market today.
The company's processors never made it to market, so there's no way to independently verify some of the claims that Soft Machines made about its technology while it was still a stand-alone entity.
However, if Soft Machine's technology is the real deal, and if Intel can leverage it to deliver an exciting leap in processor performance in upcoming products, then the Soft Machines buy could be just about the best $250 million that the chip giant has ever spent.
This start-up powers Intel's artificial intelligence strategy
One area where Intel risks being left behind is the market for chips that handle artificial intelligence processing.
Intel, of course, says that it currently has a commanding lead in the market for chips that handle machine learning and artificial intelligence tasks.
That statement is true, but there's a catch: Intel's general-purpose CPU technology, which has been the default technology for virtually all data center workloads including artificial intelligence, is being displaced by more specialized processors such as NVIDIA's (NVDA -10.01%) graphics processing unit, or GPU technology.
To not be left behind in a world that's shifting from general-purpose processors to more efficient, specialized processors, Intel paid over $400 million for a start-up called Nervana Systems.
Image source: Intel.
Nervana Systems builds a chip called the Nervana Engine, which the company describes as an "application specific integrated circuit (ASIC) that is custom-designed and optimized for deep learning."
Nervana, now under Intel, claims that the Nervana Engine can deliver much better performance and efficiency for deep learning, a type of machine learning, than GPUs do.
Only time will tell if Intel's Nervana Engine product family is ultimately an effective competitor to NVIDIA's GPUs in the deep learning market -- which benefit from an established and expanding hardware and software ecosystem -- but if the Nervana Engine is successful, then Nervana Systems could go down as one of Intel's best technology acquisitions ever.
