Division for programmable logic chips FPGAs: Intel spins off Programmable Solutions Group

Related Vendor

Wuxi InfiMotion Technology Co., Ltd.

Chip manufacturer Intel is planning to spin off its PSG. As an independent company, the provider of programmable logic components should be able to operate more effectively in the FPGA market. This represents a turnaround after eight years: in 2015, Intel acquired Altera, the second-largest FPGA specialist at the time. Competitor AMD swallowed FPGA market leader Xilinx just last year.

Intel is expected to spin off its Programmable Solutions Group (PSG) effective January 1, 2024. Simultaneously with the recording of business results, the PSG will commence operations as a separate business unit - "with ongoing support from Intel," as the chip manufacturer emphasizes. Sandra Rivera will lead PSG as Chief Executive Officer. Rivera is currently working as Executive Vice President and General Manager of Intel's Data Center and AI Group (DCAI). Time Magazine currently ranks her among the 100 most influential people in the field of artificial intelligence. Shannon Poulin will serve as Chief Operating Officer alongside her. Intel CEO Pat Gelsinger is confident: "Sandra has proven herself by reviving DCAI and putting the company on a successful path. I am confident she will lead PSG with the same dedication, energy and commitment."

The spin-off of the PSG comes somewhat surprisingly: While AMD just last year spent a lot of money to acquire the former FPGA market leader Xilinx and has successfully integrated it—Xilinx has significantly contributed to AMD's good balance sheet in the past fiscal year - Intel is now taking the opposite path and spinning off its "Programmable Solutions Group" as an independent company. Behind the PSG is primarily FPGA specialist Altera, which Intel bought in 2015 for 16.7 billion US dollars. At the time, Altera was the second largest producer of PLDs and FPGA (Programmable Logic Devices and Field Programmable Gate Arrays).

Gallery

Gallery with 5 images

In 2019, Intel decided to combine its "Network Infrastructure Division" with the PSG to form the "Network and Custom Logic Group", which was to focus on 5G, artificial intelligence and machine learning. Ultimately, however, the PSG remained, in parallel with the "Network & Custom Logic Group". From the outside, it seemed as if Intel didn't really know what to do with its FPGAs.

Two companies, two speeds

Since then, Xilinx has developed its FPGAs into widely programmable system-on-a-chip components, even introducing a sensation in 2018: the Zynq UltraScale+ RFSoC series with a fully integrated radio (RF) signal chain for the first time. With this, the company was able to tap into growth markets such as mobile base stations. Things seemed to move more slowly at the PSG. Intel continued to focus on the business with accelerators for data centers. Not until the end of 2022 did Intel's PSG catch up and present at the in-house exhibition "Intel Innovation 2022" first Intel FPGAs with a radio frontend, PCIe 5.0 and CXL.

The fact that Xilinx (now AMD) and Intel have increasingly focused on high-performance FPGAs in recent years has left room for the third long-standing FPGA provider, Lattice Semiconductor: With a clear focus on low-power FPGAs with small form factors, it has been able to establish itself in the lower to middle performance range and expand its position here.

In this context, it will be interesting to watch how the PSG will position itself as an independent company. Growth potential is certainly available for all players: The volume of the FPGA market is expected to increase from around 8 billion US dollars in 2023 to 11.5 billion US dollars in 2027 with an average annual growth rate (CAGR) of over 9 percent, as analysts have determined.

At least: During Intel's earnings report for the second quarter of 2023, the company highlighted that the PSG has achieved record revenues for the third quarter in a row. The group has consistently implemented its product roadmap, including the launch of the Intel Agilex 7 with the R-Tile chiplet in the second quarter—the first FPGA with PCIe 5.0 and CXL capabilities and the only FPGA with fixed IP to support these interfaces. PSG has already brought 11 of the 15 new products to market that the team had planned for the calendar year 2023.

More autonomy and flexibility in FPGA competition

By separating from the parent company, the PSG is expected to gain the necessary autonomy and flexibility to accelerate its growth and assert itself more effectively in the competitive FPGA industry. This caters to a broad spectrum of markets, including data centers, communication, industry, automotive, aerospace, and defense. Private and public investors can specifically participate in the new company and thus accelerate its strategic repositioning. Ultimately, the goal is to achieve "significant value creation."

Over the next two to three years, Intel also plans to take its PSG public. The semiconductor manufacturer aims to maintain influence over the fate of the new company through a majority stake.

The two companies will continue to work strategically together, according to their own statements—this includes the relationship between the PSG and the Intel Foundry Services (IFS). "Building on the highly successful Supply Resilience Program pilot project of PSG, the relationship with IFS will enable PSG to offer customers greater predictability of deliveries tailored to their needs, thus ensuring a more stable supply chain," the company announced in a press release. This means: PSG can have its components manufactured at several globally distributed IFS sites, not just in Taiwan.

Gelsinger: Intel should refocus on its core business

"Our intention to establish PSG as an independent company and pursue an initial public offering is another example of how we are consistently unlocking more value for our stakeholders," says Gelsinger. With IFS backing, PSG can differentiate itself from competition through capacity and supply reliability. Intel's product teams, on the other hand, can "focus on our core business and long-term strategy."

Gelsinger sees the leadership of PSG in good hands with Rivera: She has made a significant contribution to getting Intel's DCAI business back on track for market leadership and growth, with a more competitive product roadmap and "a strong focus on disciplined execution." Rivera's track record of driving effective transformations also extends to her leadership of the Network Platforms Group, where, according to Gelsinger, she "pioneered ways to integrate silicon and software to create greater customer benefit and further develop network infrastructure with Intel-based solutions." Intel has already initiated a comprehensive internal and external search process for a new head for DCAI. Until this person is found, Rivera will continue to lead DCAI.

"The establishment of PSG as an independent company will enable us to realize our full potential as we strive for a leadership role in this challenging and important area of the semiconductor industry," says Rivera. The strategic relationship with Intel will be beneficial as it provides the highest level of flexibility, "when it comes to addressing fast-growing markets such as automotive, data centers, and communication."

End-to-end portfolio of FPGA products

Poulin sees the PSG business at a significant turning point: this way, the new company could build a powerful end-to-end portfolio of FPGA products and at the same time improve its go-to-market strategy: "This way, we can increase our market share." He sees the development as a benefit to the entire FPGA industry.

Today's announcement follows the successful completion of an initial public offering for the Mobileye business in 2022, as well as the announced investments by Bain Capital Special Situations and TSMC in Intel's subsidiary IMS Nanofabrication in 2023. Combined, these transactions underscore Intel's intense focus on advancing its IDM 2.0 strategy, promoting growth in its core businesses, and creating value for its shareholders across all its assets. (me)