Chip giant Intel (INTC 5.38%) is reportedly in talks to potentially acquire SambaNova Systems, an AI start-up that was once valued at $5 billion. The rumored price tag is much lower at $1.6 billion, according to Bloomberg.
SambaNova is focused on enabling fast and efficient AI inference. The company develops custom AI chips, which it refers to as Reconfigurable Dataflow Units, or RDUs. Those RDUs are used in the company's SambaRack, which combines hardware, networking, and software into a complete rack-scale solution. SambaNova also offers a cloud AI platform powered by its hardware.
Image source: Intel.
The last AI acquisition didn't pan out
SambaNova would not be Intel's first large AI-related acquisition. In 2019, well before ChatGPT sparked the AI boom, Intel paid approximately $2 billion for Habana Labs. Habana's core product was the Gaudi AI training processor, which was being sampled with large hyperscalers at the time of the acquisition.
Under Intel's ownership, Gaudi 2 and Gaudi 3 were eventually launched. While the chips provided solid performance and efficiency, Intel was unable to gain any meaningful traction. Nvidia and its GPUs ultimately won the battle for AI training supremacy. The Gaudi line of chips had an unfamiliar architecture and an immature software ecosystem, which contributed to their lackluster sales.
Another factor was a scatterbrained approach to AI chips. Intel was simultaneously developing Habana's Gaudi chips and data center GPUs aimed at AI workloads. Neither strategy worked. Intel eventually scrapped Falcon Shores, a data center GPU that incorporated some of Gaudi's technology, effectively ending its attempt to break into the AI training market.
The failure of the Habana Labs acquisition wasn't entirely Intel's fault. Nvidia's proprietary CUDA platform, which supports only the company's GPUs, has become the industry standard for accelerated computing over the course of nearly two decades. CUDA and the mature software ecosystem built around it gave Nvidia a critical advantage.
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This time could be different
If Intel ultimate acquires SambaNova, the deal could turn out differently for the chip giant. For starters, SambaNova is already a portfolio company for Intel Capital, the company's venture capital arm. Intel CEO Lip-Bu Tan is also SambaNova's Chairman.
While Habana Labs was focused on AI training chips, SambaNova sells complete AI inference solutions. There's likely no beating Nvidia in the AI training market at this point, but the AI inference market is far more competitive. Efficiency is just as important as raw performance, and that's where custom chips like SambaNova's can shine. And because SambaNova sells rack-scale AI inference solutions that can be easily slotted into AI datacenters rather than just chips, the company has found some success winning over customers.
In October, SambaNova announced that it had won three deals to use its systems to power sovereign AI inference clouds in Australia, Europe, and the United Kingdom . In November, the company was selected by French cloud computing company OVHcloud to power its AI Endpoints solution along with GPU-based systems.
Shifting focus to rack-scale AI solutions aligns with Intel's latest AI strategy. When the company cancelled Falcon Shores earlier this year, it noted that it would pursue a rack-scale AI strategy by developing fully integrated systems that could be installed in data centers. Acquiring SambaNova is one way to accelerate that process, although it's unclear what an acquisition would mean for Jaguar Shores, the successor to Falcon Shores.
Intel does not have a great track record with acquisitions, particularly AI acquisitions. However, the acquisition of SambaNova would make a lot of sense given the company's focus on AI inference and rack-scale solutions, as well as its exit from the AI training market. There's no telling when or if a deal will be announced, but acquiring SambaNova would be a reasonable way for Intel to gain ground in the AI infrastructure market.
