Intel’s faltering GPU launch has only made matters worse as it reports rare loss

Intel’s Accelerated Computing Systems and Graphics Group (AXG), which is responsible for Alchemist’s graphics card lineup, has lost $507 million to the company in the past three months. That’s significantly more than it lost in the first quarter of 2021, which came in at $168 million.

Much of that money is tied up in “inventory reserves and roadmap investments,” Intel explains. Alchemist has yet to hit shelves somewhere outside of China and could be further delayed according to recent leaks from YouTuber Moore’s Law Is Dead (opens in new tab)yet the inventory is built up, ready for release at some point.

Now, that kind of inventory build-up is to be expected before a major product launch, but it coincided with one of Intel’s worst financial reports in years. The company posted revenue of $15.3 billion (opens in new tab)down 17% year-over-year and $2.7 billion below projected outlook.

Alchemist wouldn’t have done much to fill that gap, but a timely release may have helped make Intel’s big push into the graphics industry seem much more rewarding to shareholders.

“The sudden and rapid decline in economic activity was the main driver of the shortfall, but the second quarter also reflected our own execution difficulties in areas such as product design, DCAI and the increase in AXG offerings,” said CEO Pat Gelsinger (via Search alpha (opens in new tab)).

Intel has to lower its expectations for AXG, stating that it “will not meet our GPU unit target”.

He also somewhat elaborates on why Intel Alchemist has been unable to deliver on time, noting, “COVID-related supply chain issues and our own software readiness challenges caused availability delays that we continue to try to address.” .”

However, there is also positive news, and it’s not just the losses of Meta’s Reality Labs division (opens in new tab) makes AXGs look small.

“We remain on track to generate more than $1 billion in revenue this year. In the second quarter, we started ramping up Intel Arc graphics for laptops and OEMs, including Samsung, Lenovo, Acer, HP and Asus.. Intel Arc A5 and A7 desktop cards will begin shipping in Q3,” Gelsinger said.

But what condition these cards will be in when they’re released is quite another.

Those software readiness challenges are a common theme in reviews of the Intel Alchemist A380 GPU available in China today. Wolfgang Andermahr of Computer Base (opens in new tab) looked at the card and said of the drivers, “This is so bad right now that it’s hard to believe Intel will be able to bring the quality to a usable level in the coming months.”

It’s a shame that Intel’s graphics efforts haven’t come at a good time for the chip maker. Ultimately, it would be a shame to see Alchemist and its successors Battlemage, Celestial and Druid be hit by greater headwinds at the company. I say that mainly because it would be very good for everyone to have another competitor in the graphics card market, and if not Intel, then who?

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