• Intel announced plans to develop its own AI chips on an earnings call Friday
• The company's previous strategy has been to acquire AI startups that have already developed their own chips
• Analysts remain split on whether or not the plan will work, citing Nvidia's dominance in the market

Intel (NASDAQ:INTC) CEO Lip-Bu Tan announced that the company will be working to develop its own AI chips, in an earnings call on Friday.

"This is not a quick fix," Tan said on the call. He continued that he would be combing through Intel's existing products, looking for ways to sharpen them to meet emerging trends in the AI market.

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"We are taking a holistic approach to redefine our portfolio, to optimize our products for new and emerging AI workloads,” Tan said. "Our goal is to become the platform of choice for our customers. This requires us to radically evolve our design and engineering mindset and anticipate the needs of our customer well in advance.”

One of Intel's biggest missed opportunities over the last years has been its failure to challenge Nvidia (NASDAQ:NVDA) in the AI chip market. With a valuation of $2.65 trillion, Nvidia has become the dominant player in the market.

Previously, Intel's approach has been to let AI companies develop the chips and then to acquire those companies. Between 2016 and 2019, it acquired a number of AI startups, including Movidius, Nervana, and Habana Labs. However, many of these deals failed to help the company gain traction against Nvidia and other competitors.

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Intel's chief financial officer, David Zinser, told Reuters that the company will be putting acquisitions on hold for the near future. "Our priority will need to be, at this point, getting the balance sheet to a better place,” he said.

Analysts are split on whether or not the plan will work.

Bob O'Donnell, the chief analyst at Technalysis Research, told Reuters, "Intel has a long history of building important new silicon developments within its own walls, so I'm not shocked to see them focus on in-house developments for AI. If they can build the appropriate set of software support to help make it easy to deploy these new chips, then they have a chance—but that is a big if."

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Other analysts told Reuters that they think the move is too little, too late, telling Reuters that Nvidia's position is too strong, and combined with the efforts of other companies like Amazon (NASDAQ:AMZN) and Google, there simply isn't room for a new player. 

Hendi Susanto, a portfolio manager at Gabelli Funds, told Reuters that the company provided a peek at their overall AI strategy on the call. That strategy is to focus on chips and systems that run AI applications and edge devices. "While these areas show promise, the scale and pace of their growth remain uncertain,” she said.

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This article Intel Planning A Homegrown Challenge To Nvidia, Says It's 'Not A Quick Fix' originally appeared on Benzinga.com

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