Intel began to write off Gaudi AI accelerators because they are not selling well

Strong demand for Nvidia’s compute accelerators made it the world’s largest company by market capitalization, albeit briefly. AMD executives also admitted this week that demand for its Instinct accelerators exceeds supply. And only Intel had to declare that its own expectations in this area were too high, and it would not be able to earn the planned $500 million in supplies of Gaudi 3 this year.

Image Source: Intel

Intel, as The Verge explains, previously expressed confidence in its ability to earn from $1 billion to $2 billion in total from the artificial intelligence boom this year, and at least $500 million from the supply of Gaudi computing accelerators as such. Having published a quarterly report in at the end of this work week, she did not hide the fact that she would not be able to get closer to her cherished goal. “We will not reach our goal of $500 million in revenue from Gaudi in 2024,” said CEO Patrick Gelsinger.

While the Gaudi 3 family of accelerators were announced last quarter, “overall demand for Gaudi was below expectations as accelerator adoption was impacted by the transition from Gaudi 2 to Gaudi 3, as well as the ease of use of the software,” the Intel chief added. Either way, he said, the company is excited about the market potential available to it in this area. He believes there is a demand in the market for solutions with excellent total cost of ownership based on open standards, and Gaudi can be a great value proposition in this regard.

By the way, Intel’s operating profit in the third quarter was reduced by $300 million due to the need to write off part of the accelerator inventory, and the situation with the revision of the revenue forecast for the worse has a direct bearing on this. It is not specified which accelerators had to be written off, but we may be talking about solutions from previous generations, since Gaudi 3 only came out in the third quarter.