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Seems really weird given that is the one part of DCAI that seems to be doing very well, and I feel like it would be a key part of intel's AI strategy. Maybe like mobileye/IMS it is something where they plan to keep main control over while allow them extra room to thrive with some more freedom? I guess it could also be the ability to generate extra investment that PSG needs to overtake Xilinx, but a debt burdened intel can't provide?
IF you think of Intel, what will you think of? for me, it's about PC and Server, and now IFS. And that's what analyst are doing research of. They won't look at any other businesses within Intel because that's not what Intel been known for.
There are many adjacent businesses within Intel that got zero recognition of being a market leader. Mobileye is one example, PSG (the one they will spin off/out next couple of years) is another such piece that got zero recognition from public investors. AMD acquired Xilinx for 49 billion USD. Altera has a big market share in FPGA as well, with 37% in 2015, it's probably above 30% even now. Lattice is in 3rd/4th place but valued at 11.5 billion as of today. If we take Xilinx market share (>50%), Altera worth at least 30 billion.
These are all fabless companies that don't have much heavy capital expenditures. They can still buy back the stock just like what other public companies been doing. Intel will still be the one that's having a heavy interest in all these business.
Although, this is the second pitch from Pat Gelsinger, you can be confident that such act will continue for the other businesses within Intel. The future is on IFS.
The third pitch that will be offered by Pat Gelsinger, I believe will be from networking and IO, this includes Ethernet products, silicon photonics transceivers, Wi-Fi, and various IPs related.
The fourth one could be Core product lines, and the entire client compute group.
Seems really weird given that is the one part of DCAI that seems to be doing very well, and I feel like it would be a key part of intel's AI strategy. Maybe like mobileye/IMS it is something where they plan to keep main control over while allow them extra room to thrive with some more freedom? I guess it could also be the ability to generate extra investment that PSG needs to overtake Xilinx, but a debt burdened intel can't provide?
I think it may be a culture shift than anything else. They must have taken AMD + Xilinx potential synergy into consideration before taking this action. But they may realize (or might be a mistake) that the synergy won't be as big as they thought it would be.
Another thing is that even Intel takes it public, Intel will still be the one making control of PSG's destiny.
But this will definitely give the team that are within PSG greater motivation. Being restricted at a company like Intel certainly make it not so agile. So that could be another reason. Another reason that I can think of is to maximize revenue growth and earning growth as pure-play fabless companies for (Mobileye, PSG, and any others within Intel)
It's amazing how the table has turned. With AMD becoming bigger and bigger by acquiring companies (the old Intel way), Intel is going on a path to give internal business groups greater and greater freedom and responsibility with divestiture along the way.
There is no indication that bigger is better, just like old Intel. but the attention surely getting diluted with other high margin business. Just like how Nvidia is trying to starve its gaming division while continue to hype its AI processors.
Seems really weird given that is the one part of DCAI that seems to be doing very well, and I feel like it would be a key part of intel's AI strategy. Maybe like mobileye/IMS it is something where they plan to keep main control over while allow them extra room to thrive with some more freedom? I guess it could also be the ability to generate extra investment that PSG needs to overtake Xilinx, but a debt burdened intel can't provide?
Not that weird. I like FPGAs as chip development tools, and they certainly have some relatively low-volume and narrow markets they fit into well (like avionics), but high volume large-scale FPGAs haven't really taken off. Microsoft likes them, but the other cloud behemoths seem to prefer ASICs, as I do. Intel has also spent a lot of R&D on OneAPI development, which is a very impressive software development environment for a long time now.
Is there even one example of Intel entering a new market segment successfully with an acquisition? (Where success is defined as enabling growth greater than the acquisition would have on its own? Or even a successful synergy product?) I can't think of one.
I hope they choose a visionary to lead the new company. The current GM is a long-time Intel sales and marketing guy.
IF you think of Intel, what will you think of? for me, it's about PC and Server, and now IFS. And that's what analyst are doing research of. They won't look at any other businesses within Intel because that's not what Intel been known for.
There are many adjacent businesses within Intel that got zero recognition of being a market leader. Mobileye is one example, PSG (the one they will spin off/out next couple of years) is another such piece that got zero recognition from public investors. AMD acquired Xilinx for 49 billion USD. Altera has a big market share in FPGA as well, with 37% in 2015, it's probably above 30% even now. Lattice is in 3rd/4th place but valued at 11.5 billion as of today. If we take Xilinx market share (>50%), Altera worth at least 30 billion.
These are all fabless companies that don't have much heavy capital expenditures. They can still buy back the stock just like what other public companies been doing. Intel will still be the one that's having a heavy interest in all these business.
Although, this is the second pitch from Pat Gelsinger, you can be confident that such act will continue for the other businesses within Intel. The future is on IFS.
The third pitch that will be offered by Pat Gelsinger, I believe will be from networking and IO, this includes Ethernet products, silicon photonics transceivers, Wi-Fi, and various IPs related.
Yes, but Pat G really like to focus on key domain. He talked about separating IFS from Intel when he was interviewed. Maybe Intel will eventually become a holding company instead of a giant conglomerate as we know today, which I'm quite supportive of.
Sandra Rivera to lead PSG as CEO. Decision positions PSG to more effectively compete in the FPGA market; ongoing strategic alignment with Intel drives value creation for both companies.
That would be a day. I can imagine the word salad now "intel Core ltd an intel corp company" . While academic I wonder would this hypothetical intel still be considered an IDM from a fabless customer trust perspective, or if IFS customers would see an intel with like 90% share in the design side as a pureplay fab?
Intel is under tremendous financial stress to do 5 nodes in 4 years and to make Intel Foundry Service competitive. There are not many better options available and significant enough to improve Intel's financial standing. Spin out FPGA group is good for Intel to get more cash. It's more or less a financial decision.
What I'm having trouble imagining is why Sandra Rivera, who currently has a huge position at Intel, would agree to take this far lesser role. I can only think of three potential reasons:
1. She wants to be CEO of a public company so much she's willing to sacrifice one of the chip industry's best jobs.
2. She can't stand working for Gelsinger and this is her ticket out with dignity.
3. She was in trouble at Intel, and this is a win-win for them to replace her and save face for her and Intel. (Firing one of the industry's most senior women wouldn't reflect well on a company that makes so many LinkedIn posts about the importance of diversity.)
I am negative on this personally.. I need to look at the financial reports but this seems like selling off a cash cow business trading the future for some short term benefits.
Perhaps the logic is this is worth it to successfully fund a more sustainable higher margin business in the future (foundry).
because they mentioned they don't seek to IPO now or next year, I can imagine the move is aimed at giving more independence to PSG. If they need cash, they may want to IPO it next year or sooner. But the intention to grow it and then IPO is quite an ideal move for investors
What I'm having trouble imagining is why Sandra Rivera, who currently has a huge position at Intel, would agree to take this far lesser role. I can only think of three potential reasons:
1. She wants to be CEO of a public company so much she's willing to sacrifice one of the chip industry's best jobs.
2. She can't stand working for Gelsinger and this is her ticket out with dignity.
3. She was in trouble at Intel, and this is a win-win for them to replace her and save face for her and Intel. (Firing one of the industry's most senior women wouldn't reflect well on a company that makes so many LinkedIn posts about the importance of diversity.)
I think it's the first than the latter. The product lines are close to going for production (such as Sierra Forest and Granite Rapids), there probably won't be that much of a change to the server roadmap for the next couple of years except for new process innovations. PSG is definitely a lot more interesting if they can make the valuation $50B or above. Just like Amnon from Mobileye, who also in favor of running a public company than a subsidiary.
I don't think Shashua and Rivera are comparable situations. Shashua was a founder of Mobileye, so he just went back to the future, including being a public company. Rivera is EVP of the $16B+ annual revenue Data Center and AI Group, of which PSG is currently one of the smaller divisions. Her new COO has been GM of PSG for a short time, but he has no prior product development experience. In my mind he'd be more credible as a Chief Revenue Officer. Shashua is a highly technical leader and visionary, who still identifies as a professor of computer science at the Hebrew University of Jerusalem.
What I'm having trouble imagining is why Sandra Rivera, who currently has a huge position at Intel, would agree to take this far lesser role. I can only think of three potential reasons:
1. She wants to be CEO of a public company so much she's willing to sacrifice one of the chip industry's best jobs.
2. She can't stand working for Gelsinger and this is her ticket out with dignity.
3. She was in trouble at Intel, and this is a win-win for them to replace her and save face for her and Intel. (Firing one of the industry's most senior women wouldn't reflect well on a company that makes so many LinkedIn posts about the importance of diversity.)
Intel needs a lot of cash/capital to finance the new Intel that Pat Gelsinger is trying to build. Unfortunately Intel's revenue is shrinking along with the unfavorable semiconductor demand condition.
If product sales can't bring in cash that's large enough and fast enough, then Intel must borrow money and/or sell assets (spinoff and IPO). Government subsidy, timing, and size are not certain and they come with lots of requirements and obligations. Compare to government subsidies and borrowing money (in various forms), IPO is probably better for Intel to get more cash with relatively low cost and less negative impacts.
Pat Gelsinger may have those reasons you mentioned in mind. But placing Mrs. Sandra Rivera as the CEO of the new independent FPGA company shows Intel wants to build strong credibility into this new company at the very beginning. Consequently it can potentially help Intel to gain lots of cash through the IPO.
One thing you should also consider is that AMD/Xilinx is wiping the mat with Intel/Altera. Even Lattice and Achronix are in the competitive mix. AMD really did a nice job on the Xilinx acquisition keeping the team separate and motivated. Intel seems to be focused on the Intel specific FPGA market and the rest was up for grabs. Maybe spinning it out will change that but it may be too late.
I spent quite a bit of time in the FPGA business and it was a fierce battle in the trenches. Altera did well until Xilinx switched to TSMC at 28nm then Xilinx owned it. Altera switching to Intel was rough going and with AMD/Xilinx in the TSMC inner circle that is a serious advantage. For the FPGA business the first one to the new node has a big market share advantage and that has been Xilinx since 28nm, absolutely.
One thing you should also consider is that AMD/Xilinx is wiping the mat with Intel/Altera. Even Lattice and Achronix are in the competitive mix. AMD really did a nice job on the Xilinx acquisition keeping the team separate and motivated. Intel seems to be focused on the Intel specific FPGA market and the rest was up for grabs. Maybe spinning it out will change that but it may be too late.
I spent quite a bit of time in the FPGA business and it was a fierce battle in the trenches. Altera did well until Xilinx switched to TSMC at 28nm then Xilinx owned it. Altera switching to Intel was rough going and with AMD/Xilinx in the TSMC inner circle that is a serious advantage. For the FPGA business the first one to the new node has a big market share advantage and that has been Xilinx since 28nm, absolutely.
www.servethehome.com
www.intel.com
. While academic I wonder would this hypothetical intel still be considered an IDM from a fabless customer trust perspective, or if IFS customers would see an intel with like 90% share in the design side as a pureplay fab?
