Intel plans to ship an AI chip by the end of this year that uses cheaper memory and cooling technology than rival offerings from Nvidia and AMD, as the US chipmaker seeks to capitalize on a sharp turnaround in its fortunes.

Kevork Kechichian, who leads Intel’s data center group, told the FT that the company is “starting with the basics” as it tries to challenge its rivals in the booming market for semiconductors that power AI.

Its new “Crescent Island” graphics processing unit is designed to speed up “inference” tasks, the stage when a user makes their request, rather than the training of models, an area where Nvidia’s processors are dominant.

An earlier attempt at building a GPU for training AI models called “Gaudi” saw poor sales, and its planned successor was cancelled last year.

“We decided to start rebuilding our muscles in AI… [but] we are not particularly aiming for [the training market] based on past experience,” said Kechichian, who joined Intel last year from chip designer Arm.

He added the new chip would start shipping in limited quantities to customers by the end of this year, following an 18-month development process.

Intel is also looking to take advantage of two constraints encountered by Nvidia and AMD: the need to incorporate expensive high-bandwidth memory and liquid-cooling infrastructure.

Crescent Island is an air-cooled chip that uses LPDDR5 memory, a significantly cheaper type of memory than the HBM used in chips such as Nvidia’s Blackwell.

The effort is Intel’s first push into the lucrative AI infrastructure market under chief executive Lip-Bu Tan, who took over last year after Pat Gelsinger was ousted amid concerns that his turnaround strategy was failing.