Market researcher reveals US$3.5 billion losses for Intel's GPU group, selling it off might not be a bad idea
Graphics market researcher Jon Peddie brings up some glaring issues regarding Intel’s GPU group in a recent blog post. Ever since its formal establishment in Q1 2021, Intel’s Accelerated Computing Systems and Graphics Group (AXG) has officially been recording losses of US$2.1 billion, but Peddie estimates that the actual losses are close to US$3.5 billion “depending on how Intel chooses to account for those investments, and the setup costs at TSMC.” AXG has not managed to deliver on most of the planned products in due time, so Intel CEO Pat Gelsinger could be looking to dump this group altogether.
According to Peddie, AXG underperformed by a large margin, even if it benefitted from the experience of former AMD GPU expert Raja Koduri in the past 5 years. Let us look at the glaring problems first: since 2017, AXG canceled the Xe-HPG GPU architecture aimed at data centers, postponed shipments for the Ponte Vecchio compute GPU aimed at HPC and AI applications multiple times, and it is currently struggling to launch the ARC Alchemist gaming series along with working drivers when Nvidia and AMD are preparing to launch next gen models.
As AXG wins, we could mention the launch of two low-end GPUs for low cost PCs and datacenter apps, the release of a low-power integrated GPU architecture and the delivery of the open source oneAPI for CPUs, GPUs and FPGAs.
Gelsinger has not shied away from axing unprofitable businesses like Optane, McAffe, the drone group, the NAND memory business, the sports group and the Russian operations. These six businesses were only bleeding US$1.5 billion compared to the US$3.5 billion losses coming from AXG. Peddie notes that “Gelsinger is not afraid to make tough decisions and kill pet projects if they don’t produce—even projects he may personally like.” Moreover, “the rumor mill has been hinting that the party is over and that AXG would be the next group to be jettisoned.” As one would expect, Koduri denied the rumors.
Intel could find it difficult to part with AXG, since many of its strategic developments leverage GPU processing power. Without a GPU group, Intel would be missing out on evolving opportunities like AI / ML / HPC applications, professional GPUs for CGI rendering and video encoding, edge computing for IoT applications, hybrid processors combining CPUs and GPUs etc.
Peddie believes that “the best thing Intel could do at this juncture is to find a partner and sell off the group. It could even be dressed up as a strategic move, just as they did going to TSMC to build the dGPU in the first place.” It is quite puzzling how Intel can continue to “ask governments to subsidize its investments in new fabs that can’t even build the parts they are presumably designing.” Sure, there are enough future opportunities that may turn a profit at some point, but right now “the company is facing years of losses as it tries to punch its way into an unfriendly and unforgiving market.”
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