Intel invests in chip startup with very close ties to its CEO

Last year, Intel Corporation (INTC) CEO Lip-Bu Tan came under scrutiny over the potential conflicts of interest created when Intel invested in companies that counted Tan as a shareholder.

Tan's role as a prominent venture capitalist in the tech space made him very appealing to Intel when they hired him as chief executive last March, with his deep connections across the industry seen as a powerful resource to revitalize a company that had been falling behind its competitors for years.

But the potential conflict became apparent when Intel got into a bidding war with Meta Platforms (META) last year for AI chip startup Rivos Inc. Meta ended up winning with an offer that was reportedly abound $4 billion.

Although Intel lost out on Rivos, Tan's venture-capital firm Walden Catalyst scored big as an investor in the startup.

Although Intel's board had rejected Tan's pitch to bid on Rivos, citing a conflict of interest and a lack of a coherent AI strategy, Tan had one of his lieutenants handle the pitch instead and the dealmaking proceeded, as Reuters reported.

Reuters noted that Intel's board "has implemented policies requiring Tan to recuse himself from participating in investment decisions where he might benefit," but the Rivos transaction showed that he can nonetheless benefit financially from a deal that he wasn't working on.

This scenario played out again on Tuesday when Intel announced that it had entered into a multi-year strategic collaboration with semiconductor startup SambaNova, a company that is attempting to challenge Nvidia's (NVDA) dominance in the chip space.

The collaboration makes sense for Intel, which has struggled to keep pace with its rivals in chip manufacturing and has also struggled to find outside customers for the chips it's developing at its Intel Foundry.

As part of the multi-year partnership, Intel will be contributing an undisclosed amount to a $350-million Series E fundraising round for SambaNova through its Intel Capital unit.

Tan's VC has a stake in SambaNova

What makes the deal even more noteworthy is that Tan was an early investor in SambaNova through his VC firm and also chairman of the board for the startup.

Intel says that Tan recused himself from the talks with SambaNova, which were instead handled by Kevork Kechichian, who came on board in September as executive vice president of the company's data center group.

“We have well-established governance procedures to ensure decisions are made in Intel’s best interests,” an Intel spokesman told The New York Times.

The company's stock rose 5.7% on Tuesday after the announcement.

SambaNova, which claims that its SN50 AI Chip is 5X faster that competitive chips, said that it will be working with Intel to deliver high-performance, cost-efficient AI inference solutions.

The company will now also integrate Intel Xeon processors, Intel GPUs, Intel networking and storage into the systems it sells data center customers.

Those systems also include microprocessors from Advanced Micro Devices (AMD).

“AI is no longer a contest to build the biggest model,” Rodrigo Liang, co‑founder and CEO of SambaNova, said in a statement.

“With the SN50 and our deep collaboration with Intel, the real race is about who can light up entire data centers with AI agents that answer instantly, never stall, and do it at a cost that turns AI from an experiment into the most profitable engine in the cloud.”

The challenge for the two companies will ultimately be whether they can cut into Nvidia's considerable lead in the chip space.

“Customers are asking for more choice and more efficient ways to scale AI,” Kechichian said.

“By combining Intel’s leadership in compute, networking, and memory with SambaNova’s full-stack AI systems and inference cloud platform, we are delivering a compelling option for organizations looking for GPU alternatives to deploy advanced AI at scale.”