Intel Corporation stock surged in the pre-market trading Wednesday after the chipmaker revealed its plan to operate its Programmable Solutions Group (PSG) as an independent business entity, set to commence operations in January 2024. The company also disclosed its intention to conduct a public offering of PSG stock within the next two to three years.
Intel Corporation (NASDAQ: INTC) first made its mark in the programmable chip sector in 2015 with the high-profile acquisition of Altera Corp. for $16.7 billion. Intel’s rationale for this acquisition was to enhance its footprint in the rapidly evolving market of chips that power internet-connected devices.
Programmable chips, also known as field-programmable gate arrays (FPGAs), differ from conventional chips used in data centers and personal computers. They are prized for their flexibility, efficiency, and rapid response capabilities, as customers can program them for specific use cases after purchase. FPGAs find widespread applications in data centers, telecommunications, video encoding, aviation, and other industries. They are also capable of running artificial intelligence algorithms.
Sandra Rivera, an Intel veteran, has been appointed to lead the new unit, which will continue to use Intel’s advanced manufacturing facilities for chip production. Meanwhile, Intel has initiated an extensive internal and external search for a successor to Rivera. Rivera currently leads Intel’s data center and artificial intelligence chip business, which competes head-to-head with tech giants NVIDIA Corporation (NASDAQ: NVDA) and Advanced Micro Devices, Inc. (NASDAQ: AMD).
This development follows Intel’s recent actions to sell its memory chip unit to SK Hynix and make part of its Mobileye self-driving car chip unit public. Both moves were part of Intel’s strategy to streamline its operations and generate capital to bolster its manufacturing capabilities, which had lagged behind competitors such as Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM).
Intel’s programmable chips have found some practical applications within the realm of artificial intelligence, contributing to the growth of this unit. This comes at a crucial time when the technology industry faces a shortage of chips capable of powering chatbots and other emerging technologies.
Thomas Hayes, Chair at Great Hill Capital, expressed optimism about the move, stating,
“It’s a good time to unlock value for Intel shareholders and focus on the core business. This division has had record revenue for three consecutive quarters and is in a growing industry,” said Thomas Hayes, chair at Great Hill Capital.
Intel Corporation stock is up over 2% at $36.55 at the time of publication.