Intel plans to treat its Programmable Solutions Group (PSG) as a separate business entity and aims to conduct an initial public offering (IPO) for the unit within the next two to three years. Despite the spinoff, Intel will continue to support PSG and retain a majority stake. The announcement caused a 2.3% increase in Intel’s stock price after hours. Sandra Rivera, the current head of Intel’s Data Center and AI group, will become the CEO of PSG, which will have its own balance sheet as it moves towards independence.
The move to spin off PSG follows Intel’s previous spinoff of its self-driving subsidiary, Mobileye. Intel’s CEO, Patrick Gelsinger, is implementing a strategy to control costs and focus on the foundry business and core processors, aiming to rival Taiwan Semiconductor Manufacturing Co. by 2026. Intel acquired the FPGA business when it acquired Altera in 2015 for $16.7 billion. By establishing PSG as a standalone business, Intel aims to unlock more value for its stakeholders.
This decision by Intel also reflects the growing demand for field programmable gate arrays (FPGAs) in the semiconductor industry. Lattice Semiconductor, a maker of FPGAs, has seen a 30% increase in its stock price in 2023, along with an 18% growth in sales. AMD, Intel’s main competitor, acquired FPGA maker Xilinx for $35 billion in 2022. FPGAs are simpler and more flexible than powerful processors, and they can be used in various industries such as data centers, telecommunications, and aviation. Intel’s FPGAs, sold under the Agilex brand, have reported record quarters and have contributed to the sales of Intel’s Data Center and AI group.
In conclusion, Intel plans to spin off its Programmable Solutions Group (PSG) as a standalone business and pursue an initial public offering (IPO) within the next two to three years. The company will continue to provide support and retain a majority stake in PSG. This move follows Intel’s previous spinoff of its self-driving subsidiary, Mobileye, and is part of a larger strategy by CEO Patrick Gelsinger to focus on the foundry business and core processors. The decision reflects the increasing demand for field programmable gate arrays (FPGAs) in the semiconductor industry. Intel’s FPGAs, sold under the Agilex brand, have reported strong performance, contributing to the overall sales of the company’s Data Center and AI group.
