Intel has found its first cloud customer for its Gaudi 3 AI accelerator chip: IBM Cloud.

IBM and Intel on Thursday said IBM Cloud will begin offering Gaudi 3 to customers early next year. The chip's accelerators will be available for both hybrid and on-premise environments, and IBM says it plans to enable support for Gaudi 3 within its Watsonx AI and data platform.

"Unlocking the full potential of AI requires an open and collaborative ecosystem that provides customers with choice and accessible solutions," Justin Hotard, general manager of Intel's data center and AI division, said in a statement. "By integrating Gaudi 3 AI accelerators and Xeon CPUs with IBM Cloud, we are creating new AI capabilities and meeting the demand for affordable, secure, and innovative AI computing solutions."

Gaudi 3, unveiled in December 2023, was meant to be Intel's answer to AI chips from rivals Nvidia and AMD. It's the end of the line for the Gaudi series of accelerators Intel got through its $2 billion acquisition of Habana Labs in 2019.

Intel earlier this year showed off Gaudi 3 reference designs that partners like Lenovo, Dell, HPE and Super Micro could use in servers. The designs include a new form of Ethernet connectivity designed to compete with Nvidia's InfiniBand connectivity technology. They also pair Gaudi 3 chips with Intel's Xeon 6 processor series.

But Gaudi 3 arrived at a precarious time for Intel, which has been strongly disadvantaged by Nvidia's incumbency.

In April, Intel said that it expected to generate revenue of $500 million from Gaudi 3 in 2024 — a paltry sum compared to the $4.5 billion AMD expects to rake in from sales of its Instinct MI300-series GPUs, and the $40 billion Nvidia expects from its data center business. Gaudi 3 delivers impressively high performance on the dollar, early benchmarks show, but bringing on board customers who already have strong relationships with Nvidia is presenting a challenge.

In July, Intel CTO Greg Lavender optimistically said that the company could take second place in the AI chip market behind Nvidia. A month later, after posting a $1.6 billion loss for Q2, Intel said that it would eliminate 15,000 jobs and aggressively cut costs to save $10 billion in 2025.

To make a bad situation worse for Intel, Nvidia intends to ramp up production of its next-generation AI chip, Blackwell, in Q4 after a brief manufacturing delay. Blackwell will offer up to four times the performance of the H100, the chip Gaudi 3 compares favorably against.

Intel has made a point of not providing comparisons with Blackwell, saying that it can't until Blackwell chips are publicly available.

This article originally appeared on TechCrunch at https://techcrunch.com/2024/08/29/ibm-cloud-will-offer-intel-gaudi-3-chips-next-year/