Intel has announced its plans to treat its programmable chip unit as a separate business and eventually spin it out through an initial public offering (IPO) within the next two to three years. The stock price of the chipmaker rose by 2.3% in extended trading following this announcement made on Tuesday.
To facilitate its move toward independence, Intel's Programmable Solutions Group (PSG) will have its own balance sheet. While Intel will continue to support the business and retain a majority stake, it may also seek private investment for the PSG. Sandra Rivera, who currently leads Intel's broader Data Center and AI group, will assume the role of CEO for the PSG. Intel will remain responsible for manufacturing the chips produced by the group.
This strategic decision aligns with Intel's previous spinoff of Mobileye, its self-driving subsidiary, and reinforces the company's focus on managing costs and prioritizing the foundry business and core processors under the leadership of CEO Patrick Gelsinger. The goal is to catch up with Taiwan Semiconductor Manufacturing Co. in terms of manufacturing capabilities by 2026. Intel acquired the FPGA business through its acquisition of Altera in 2015 for $16.7 billion.
Gelsinger emphasized that establishing the PSG as an independent business and pursuing an IPO demonstrates Intel's commitment to creating value for its stakeholders.
Furthermore, this move highlights the strong demand in the semiconductor industry for field programmable gate arrays (FPGAs). Other companies in the FPGA market have experienced significant growth, with Lattice Semiconductor's stock rising approximately 30% in 2023, and reporting an 18% increase in sales in the most recent quarter. AMD, Intel's main competitor, acquired FPGA maker Xilinx for $35 billion in 2022.
FPGAs offer flexibility, speed, and power efficiency compared to the powerful processors used in servers and PCs. These chips can be programmed after they are shipped to cater to specific uses in various industries such as data centers, telecommunications, video encoding, aviation, and more. Additionally, FPGAs can be utilized to run certain artificial intelligence algorithms.
Intel's FPGAs are sold under the Agilex brand. Although Intel does not provide specific sales figures for the PSG, the unit demonstrated strong performance with three consecutive record quarters, counterbalancing a decline in server chip sales. The Data Center and AI group, to which PSG belongs, generated $4 billion in sales during the second quarter.
