Ahead of Intel’s upcoming board meeting in mid-September, rumors have been circulating that the struggling giant may be mulling to selling its FPGA unit Altera, with AMD and Marvell being potential buyers. However, according to an interview with Altera’s CEO by CRN, Altera’s plan for an initial public offering (IPO) remains unchanged, as it pursues to be listed by 2026.

The information is confirmed by Sandra Rivera, Altera’s CEO. Citing her remarks, CRN notes that the FPGA unit is working on its plan, which involves selling a stake in Altera, not the entire company. Rivera further stated that this has been Altera’s communicated strategy for over a year, with an IPO planned for 2026.

Citing Rivera, the report pointed out that though Altera began operating independently from Intel at the start of 2024, it is still in the process of separating from many of the general and administrative functions of its parent company, with a target completion date of January 1, 2025.

Intel acquired Altera in 2015 for USD 16.7 billion, and the latter dropped its name afterwards, known as the Programmable Solution Group under the U.S. semiconductor giant.

It was not until 2023 that Intel announced its intention to spin off the Programmable Solutions Group into a separate, wholly-owned company. In February, 2024, the FPGA unit announced that it would revive the Altera brand, CRN reported.

The spin-off of the FPGA business is intended to achieve two goals: providing Intel with additional liquidity to fund CEO Pat Gelsinger’s costly revitalization strategy and enhancing the business opportunities for the FPGA company, according to CRN.

Intel’s board is set to meet this week to discuss restructuring plans, which may include separating its design division from its foundry operations. Citing Intel CFO David Zinsner’s comments at an investor meeting last week, a report by CNBC notes that dividing the two businesses would be a logical move, as the company is trying to create more separation between these two businesses.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Reportedly Considering Foundry Spin-Off or Merger to Mitigate Losses

(Photo credit: Intel)

Reuters previously reported that Intel is considering selling its stake in Altera, a FPGA (Field-Programmable Gate Array) manufacturer, as part of its business restructuring and cost-cutting efforts, as AMD and Marvell are said to be potential buyers.

As per a report from Economic Daily News citing sources, it’s believed that if the sale goes through, a significant portion of Altera’s orders could be redirected to TSMC, which would be highly beneficial for the Taiwanese foundry giant.

The same report indicated that Altera used to be a major customer of TSMC. However, after Intel acquired Altera in 2015, the orders were redirected to Intel. TSMC’s rapid growth, bolstered by orders from clients like Apple, AMD, and NVIDIA, helped mitigate the impact of losing Altera’s business though.

If Altera is no longer part of Intel, as it might be is acquired by companies like AMD or Marvell, which are currently key clients of TSMC, it is likely that Altera’s orders may return to TSMC in significant volumes.

Intel acquired Altera for USD 16.7 billion in 2015, and has previously indicated plans to sell a portion of its stake through an initial public offering (IPO), though no specific date has been set.

Citing sources familiar with the matter, Reuter’s report suggested that Intel’s plan does not currently include splitting up the company or selling its foundry business to buyers like TSMC, Reuters notes.

Intel had already begun segregating its wafer foundry business into an independent division and financials, starting from the first quarter of this year.

Per Reuters, the company has established a wall between its foundry and IC design business to ensure that the design division’s potential customers cannot access the confidential technologies of Intel’s foundry clients.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Reportedly Mulls to Sell FPGA Unit Altera and Freeze USD 32 Billion German Project amid Crisis

(Photo credit: Intel)

Last week, rumors have been circulating that Intel has been working with investment bankers on options to navigate the company through potholes. Latest update: options may include selling off its FPGA unit Altera and putting a halt to its USD 32 billion investment project in Germany, according to the reports by Reuters and Wccftech.

Citing sources familiar with the matter, the reports suggests that Intel CEO Pat Gelsinger and senior executives are expected to present a plan to the board later this month to revitalize the company.

Their proposal, according to the reports, includes divesting non-essential businesses and cutting down capital expenditures, such as selling off Altera and freezing the construction of the fab project in Magdeburg, Germany.

As Intel would be now unable to allocate funds from its once substantial profits to support Altera, a major producer of field-programmable gate arrays (FPGA) it acquired in 2015 for USD 16.7 billion, the sale of the company has reportedly been brought to the table. In 2023, Intel is said to be planning to spin Altera out through an IPO in three years and sell a portion of its stake through the process, but no date has been set.

Reuters indicates that Altera could also be sold entirely to another chip company interested in expanding its business portfolio, and Intel has quietly started exploring the possibility of such a sale.

On the other hand, due to delays of subsidy approvals. Intel has already been said to postpone its construction of Fab 29.1 and 29.2 in Magdeburg, Germany, as the new timeline now pushes the start of construction to May 2025. The proposal to put a halt to the project would also align with the company’s plan to reduce its capital spending by 17 percent to USD 21.5 billion in 2025, Wccftech notes.

Sources familiar with the matter said that Intel’s plan does not currently include splitting up the company or selling its foundry business to buyers like TSMC, Reuters notes.

An Intel spokesperson declined to comment Sunday, Reuters notes.

Intel is currently facing significant challenges. On August 1, the company announced financial results that fell short of Wall Street expectations and revealed plans to cut over 15% of its workforce.

Shortly after, former Intel board member Lip-Bu Tan has stepped down after just two years. Tan served as the CEO and executive chairman of electronic design automation (EDA) software company Cadence Design Systems Inc.

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• [News] Lip-Bu Tan Resigns from Intel Board Amid Reported Disagreements
• [News] Intel Reportedly Considering Foundry Spin-Off or Merger to Mitigate Losses

(Photo credit: Intel)

As Jiwei reported, AMD, although trailing NVIDIA in AI, has recently clinched significant deals, earning the trust of two major clients, Oracle and IBM. Oracle plans to integrate AMD’s Instinct MI300X AI chips into their cloud services, complemented by HPC GPUs. Additionally, as per insights from Ming-Chi Kuo, TF International Securities analyst, IBM is set to leverage AMD’s Xilinx FPGA solutions to handle artificial intelligence workloads.

Oracle’s extensive cloud computing infrastructure faces challenges due to a shortage of NVIDIA GPUs. Nonetheless, Oracle maintains an optimistic outlook. They aim to expand the deployment of the H100 chip by 2024 while considering AMD’s Instinct MI300X as a viable alternative. Oracle has decided to postpone the application of their in-house chips, a project with a multi-year timeline. Instead, they are shifting their focus to AMD’s high-performance AI chip, the MI300X, well-regarded for its impressive capabilities.

Reports indicate that Oracle intends to introduce these processor chips into their infrastructure in early 2024.

Similarly, IBM is exploring chip options beyond NVIDIA. Their new AI inference platform relies on NeuReality’s NR1 chip, manufactured on TSMC’s 7nm process. AMD plays a pivotal role in NeuReality’s AI solution by providing the essential FPGA chips. Foxconn is gearing up for AI server production using this technology in the Q4 2023.

Guo also pointed out that, although Nvidia remains the dominant AI chip manufacturer in 2024, AMD strengthens partnerships with platform service providers/CSPs like Microsoft and Amazon while acquiring companies like Nod.ai. This positions AMD to potentially narrow the AI gap with Nvidia starting in 2025. This collaboration also affirms that AMD remains unaffected by the updated U.S. ban on shipping AI chips to China.

(Image: AMD)

Shipments of CPUs, GPUs, and chipsets have been falling due to the weakening demand for PCs, gaming devices, and cryptocurrency mining machines. This recent development has also constrained the growth of the market for ABF substrates. Currently, the demand situation for this material is exhibiting signs of uncertainty.

Regarding the distribution of the demand for ABF substrates, applications that are driving growth are cloud services, AI, and automotive electronics. CPUs, GPUs, FPGAs, and switch ICs are chips that are deployed in servers purposed for a wide range of applications related to cloud services and endpoint AI technologies. Meanwhile, other AI-related applications require high-end ASICs. At the same time, more and more high-end SoCs and MCUs are embedded in vehicles. All in all, these aforementioned applications will spur the demand for ABF substrates. Additionally, package size continues to increase for high-performance ICs. This trend, too, will sustain the demand for ABF substrates over the long haul. By contrast, the PC market has matured, so the related demand is shrinking. From a long-term perspective, the influence of the PC market on the demand for ABF substrates will gradually wane.

TrendForce forecasts that the scale of the global market for ABF substrates will expand from US$9.3 billion in 2022 to US$17.1 billion in 2026, thus showing a CAGR of 16.4%. Due to the influence of the US technology export restrictions against China, the demand for ICs purposed for HPC will be higher than expected for the period from 4Q22 to 3Q23. This, in turn, will also further raise the demand for ABF substrates.

Then, starting from 4Q23, exports of HPC chips to China will start to slow down. However, demand will continue to grow for ASICs, AI chips, SoCs, and MCUs at that time. The growth in these application segments will offset some of the negative effect of the US export restrictions on the market for ABF substrates. In terms of the supply-demand dynamics of ABF substrates, a balance will gradually be attained in 2024. However, demand will get stronger in 2025 and 2026, so supply could tighten during that two-year period.