Pat Gelsinger, CEO, of Intel Corporation, testifies throughout the Senate Commerce, Science, and Transportation hearing on semiconductors titled Developing Next Generation Technology for Innovation, in Russell Senate Office Constructing on Wednesday, March 23, 2022.
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Intel said it should treat its programmable chip unit as as a standalone business, with an aim to spin it out through an IPO in the subsequent two to 3 years.
The chipmaker’s stock price rose 2.3% in prolonged trading after the announcement on Tuesday.
Intel’s Programmable Solutions Group may have its own balance sheet because it heads toward independence. The corporate will proceed to support the business and retain a majority stake, and will also seek private investment.
Sandra Rivera, who leads Intel’s broader Data Center and AI group, will turn out to be PSG CEO. Intel will manufacture the group’s chips.
The move follows Intel’s spinoff last 12 months of Mobileye, its self-driving subsidiary, and continues a method under CEO Patrick Gelsinger to regulate costs and give attention to the foundry business and core processors in an effort to catch Taiwan Semiconductor Manufacturing Co. in manufacturing by 2026. Intel acquired the FPGA business when it bought Altera for $16.7 billion in 2015.
“Our intention to ascertain PSG as a standalone business and pursue an IPO is one other example of how we’re consistently unlocking more value for our stakeholders,” Gelsinger said in a statement.
The move also highlights the strong demand within the semiconductor industry for field programmable gate arrays, or FPGAs. Lattice Semiconductor, a maker of FPGAs, has seen its stock rise about 30% to date in 2023, and reported 18% growth in sales in essentially the most recent quarter. AMD, Intel’s chief rival, bought FPGA maker Xilinx for $35 billion in 2022.
FPGAs are simpler than the powerful processors at the center of servers and PCs but are sometimes more flexible, respond faster and will be more power-efficient. They’re “programmed” after they’re shipped for specific uses in data centers, telecommunications, video encoding, aviation and other industries. FPGAs may also be used to run some artificial intelligence algorithms.
Intel’s FPGAs are sold under the Agilex brand. Intel doesn’t break out PSG sales yet, but said in July that the unit had three record quarters in a row, offsetting a slump in server chip sales. PSG has been a part of Intel’s Data Center and AI group, which generated $4 billion in sales within the second quarter.
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