Intel to spin out FPGA segment with IPO in two to three years

Intel plans to spin out its programmable chip unit, operating it as a standalone business in January and then seeking a public offering for stock in the next two to three years.

The move is seen as a means to raise capital, part of CEO Pat Gelsinger’s strategic moves to restructure Intel as it competes with TSMC on the chip production side and, often, Nvidia and AMD on the processor design side.

The Programmable Solutions Group will be headed up by Sandra Rivera as CEO, Intel reported late Tuesday.

Intel took Mobileye public in 2022 while still holding a majority stake.  Intel is expected to hold a majority stake in PSG once it reaches the IPO stage.

The announcement briefly caused a 2% uptick in Intel stock after the bell on Tuesday, but the price moderated on the opening bell Wednesday, with a price of $35.82 at 10 am ET.

The unit makes FPGAs, which serve into data centers, communications, industrial, automotive, aerospace and defense.  Gelsinger said the move allows PSG to grow share in the FPGA market with the ability to differentiate itself with capacity and supply resilience from Intel Foundry Services.

FGPAs are a growing market, with $8 billion in revenues in 2023 and $11.5 billion by 2027, according to third party estimates that Intel cited. PSG had record revenues for a third quarter when Intel last reported earnings in July.

Intel’s FPGA line is labeled Agilex.  The Intel Agilex 7 was launched earlier in 2023.   Intel had acquired Altera in 2015 to enter the business.

Analyst Jack Gold of J. Gold Associates said the spin out furthers Gelsinger’s vision to concentrate no its core markets “and partner for the rest. I expect we’ll see other such moves in the future to create independent companies for non-core technologies or even sell-offs.”   He noted that the total FPGA market is broader than Intel’s focused products today.

“Establishing PSG as a standalone business will enable us to compete more effectively in the FGPQ market and deliver greater value for our customers,” Rivera said. She has been at Intel 23 years, and has served more than two years as general manager of the data center and AI group at Intel.   She continues in that role until a new leader is named.