Intel intends to turn the Programmable Solutions Group as a standalone business
- The programmable solutions group will be reported as a separate business unit in 1Q24
- Value unlocking move with a potential IPO on the cards cheers Intel’s share price
- Funds gathered from the potential IPO could also help finance Intel’s capital-intensive manufacturing business
The programmable solutions group will be reported as a separate business unit in 1Q24. The programmable solutions group (PSG) was built on Intel’s acquisition of Altera Corp in 2015 for more than $14b. Altera’s last reported revenue as at 2019 was $1.99b, accounting for c.3% of Intel’s FY19 revenue. The PSG group is in the FPGA (field programmable gate array) industry which is forecasted to grow from $8b to $11.5b between 2023-2027, which represents a CAGR of more than 9%. Intel’s key competitor AMD also has a similar business via Xilinx acquisition.
Value unlocking move with a potential IPO on the cards cheers Intel’s share price. The PSG currently focuses on communication equipment and cloud computing markets which are closely linked to Intel’s core business. Establishing PSG as an autonomous unit helps create value as it gives it the flexibility to compete effectively within the industry and explore new areas such as industrials and aerospace. There could also be a potential IPO of the PSG in two to three years, similar to the MobilEye IPO which further unlocking value for Intel’s shareholders, though Intel will still retain a majority stake. The funds gathered from the potential IPO could also help finance Intel’s capital-intensive manufacturing business. HOLD TP US$32.72.