The Six Five Team discusses Intel Spins Out PSG FPGA Unit.
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Transcript:
Daniel Newman: Pat, Sandra Rivera is running off to become the CEO of NewCo. What’s going on at Intel?
Patrick Moorhead: That’s right. So second spin for Intel Corporation. The first one was Mobileye. And the second one here is PSG. And PSG is the programmable systems group or programmable solutions group, which equates to FPGAs. And, Dan, we’ve talked a lot on The Six Five about FPGAs really honing in on what Lattice has done. I think what Lattice has shown is that if you’re a pure play, you can grow more than anybody else consistently in, not just in the space, but even semiconductors for a company their size. They’ve outperformed, I think, everybody maybe except Broadcom out there, but I love the up into the right charts that are two years in extension and I just love that. So with this, not only does Intel get to, quote, unquote, unlock shareholder value… Here’s very basically what that means is that some of the parts that Intel don’t equate to what Intel believes is a fair market cap number. Okay? And by spinning each unit out, it can be more easily compared. The thought is on Wall Street, it’s more focused, it can move quicker.
So you saw the Intel stock pop, you saw the Lattice stock go down at the same time. So this makes sense. From a focus standpoint, I think this enables Intel to focus on CPU, GPU, and NPU, and then FPGAs for whatever the NewCo is. So very straightforward from Wall Street standpoint, this is about focus, Intel will retain most of the ownership of the company. I think it does beg the question for AMD, which says, “Hey, we bought Xilinx for 3X billion,” and what does that mean from a adding incremental value? If you look at the percentage of the size of those businesses, I do think that just because Intel spins out, doesn’t negate the benefit of Xilinx to AMD and its customer sets. But we will have to see, and I’m looking forward to working with newly-minted CEO, Sandra Rivera. Sandra, you know where to find us.
Daniel Newman: Absolutely, Pat. Look, you and I have been less than shy about touting the potential of FPGAs. And as we’re moving to more of the hardened silicon, the FPGA has been a catalyst to getting to that. But it’s also been the whole continuum from the large scale that you see often from Intel and from AMD with Xilinx. And we’ve been very positive about the likes of Lattice Semiconductor and what they’re doing in the small and mid-range. But what we do know is this space is hot.
For Intel, though, this is, I think, a big Wall Street move. Why is it a big Wall Street move? Well, first of all, it’s mobilized spinoff has proven to be very successful for adding shareholder value. Intel retained the majority of the control of that business, but was able to unlock a whole lot of market cap and liquidity for the company. This is a little bit different because Intel will need to create the agreements that’ll exist between the new business and its existing business from an IDM and integration standpoint. But from a ability to put focus, unlock market potential and really create and unlock that shareholder value, you’ve seen, Pat… I mean, what stock in the semis has performed better besides Nvidia? What has performed better this year than Lattice? And I think it’s few and far between.
Patrick Moorhead: Yeah.
Daniel Newman: And that’s because Lattice, despite market complexities, has been well diversified and has been able to continue to grow against the trend lines. Well, PSG has been a pretty strong business. And while Intel hasn’t talked a lot about the details of the performance of that business, it is very interesting. So it’s a positive one.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
