Intel’s Gelsinger: Separated PSG Business Helps With ‘Building Up The Channels’
Sandra Rivera will continue to lead Intel’s DCAI until a successor is found.
Intel plans to separate its Programmable Solutions Group into a standalone business starting Jan. 1, a move that Intel CEO Pat Gelsinger says will help the unit better compete, go public and bring new opportunities for partners.
A separate PSG business will aid in “building up the channels,” Gelsinger said Tuesday during a conference call announcing the plan.
“We’ve been largely homogenized inside of the Intel channel structure, particularly building up the distributors and VARs here,” Gelsinger said. “It’s another area of particular focus that we see as nicely accelerated by creating this clear operational separation under (PSG’s) leadership.”
Intel To Separate PSG Business
CRN has reached out to Intel for comment on its partner program.
Intel PSG creates field-programmable gate arrays (FPGAs), complex programmable logic devices (CPLDs), structured application-specific integrated circuits (ASICs) and other related goods and services.
The new business’ leadership, also announced Tuesday, includes Intel Executive Vice President Sandra Rivera moving into the role of CEO of the standalone business and Shannon Poulin – currently corporate vice president and general manager of PSG – taking on the role of chief operating officer of the new business, according to Intel.
Rivera is currently EVP and GM of the Santa Clara, Calif.-based chipmaker’s Data Center and AI Group. Both Rivera and Poulin have each worked at Intel for more than 20 years.
“I am very excited for Sandra as she transitions into this new role and embraces these new challenges and opportunities,” Gelsinger said on the call. “Sandra has been instrumental in putting DCAI on the right path over the last two-and-a-half years of leading the organization. … It is this breadth and consistency and results that makes me confident she is ready to take the next step and take on the CEO role of PSG.”
Rivera will continue to lead the DCAI unit until a successor is found. Rivera is “confident that DCAI is on a clear path to recapture product and TCO (total cost of ownership) leadership across all workloads and markets,” she said.
On the conference call, Rivera revealed that at the end of Intel’s second fiscal quarter, PSG’s trailing 12 month revenue was $2.9 billion. She described its gross and operating profits as “well above Intel corporate average.”
However, Rivera said that for PSG, “the next few quarters” will include “normalization of supply and demand caused by extreme COVID-induced cyclicality even as we make some necessary investments in products and go-to-market capabilities.”
Returning to a normal cycle, that trailing 12 month revenue will be closer to $2 billion, she said.
“These actions will position us to gain share, especially in the most profitable markets over the next two to three years,” she said, promising more details on her targets in early 2024.
In July, Intel reported second fiscal quarter revenue of $12.9 billion for the three months ended July 1.
On that earnings call, Gelsinger told listeners that the PSG unit “delivered record results for a third consecutive quarter.”
Intel is expected to report earnings for its third fiscal quarter on Oct. 26.
The Mobileye, IMS Treatment
Gelsinger told listeners on the conference call to look to his company’s actions with its Mobileye and IMS Nanofabrication units to see why Intel wants to separate the PSG business.
The chipmaker’s Mobileye business went public last year. Earlier this year, Intel sold a roughly 10 percent stake in IMS to Taiwan Semiconductor Manufacturing Co. (TSMC) and a 20 percent stake to private equity firm Bain Capital. Intel will retain a majority stake, however, according to the vendor.
Likewise, PSG will present private investors opportunities to take stakes and should go public “over the next two to three years,” according to Intel. Intel expects to report PSG as a separate business unit in its first fiscal quarter results.
“We’ve done Mobileye very successfully,” Gelsinger said. “We’ve done IMS … very successfully. You know, we believe this will be very successful.”
A separate PSG unit is a way for Intel to correct for an underserved part of its customer base, he said.
“We also see that the business has underperformed, right, particularly in the higher margin areas of the business where we’ve been very focused on data center and other areas of the business,” he said. “So we haven’t been managing it as well as we could have. We believe this will give the best of Intel. … We think this is a great value creation opportunity for the market and clearly doing a better job to service a range of customers that we’ve been under-serving of late.”
A separate PSG unit should also better compete in the FPGA market, Rivera said. One of its biggest competitors, Xilinx, was bought by AMD last year for $49 billion.
The business will target specific industries including automotive, aerospace and defense.
Rivera sees particular demand for PSG’s offerings for data ingesting and accelerating security, networks and artificial intelligence (AI). Post-COVID-19, customers have sought long-term supply agreements for domestically produced products in the U.S. and Europe, another opportunity for the new business, according to Intel.
PSG will benefit from a relationship with Intel and from cloud service providers. PSG can also use foundries outside of Intel Foundry Services (IFS).
The new business will start sampling mid-range products before the end of the year, Rivera said.
The first group of low-end products is expected in the first half of 2024. The PSG team has launched 11 of 15 new products planned for calendar year 2023, according to Intel.
“We have a lot of customer interest and so the pipeline was excellent,” she said. “The demand is high.”
The Two Leaders
Each of the future heads of the standalone business have clocked in more than 20 years with Intel.
Rivera, the future CEO, has held her current title since June 2021, according to her LinkedIn account. She joined Intel in 2000 as a marketing director.
On Tuesday’s conference call, Gelsinger called Rivera instrumental to restoring leadership and growth for Intel’s DCAI business.
Poulin, the future COO, has worked at Intel for more than 24 years, according to his LinkedIn account. He’s held his current CVP and GM role since October 2021. He started at Intel in 1999 with a role in strategic planning.
Rivera said she will build out the executive team of the new business “in the coming weeks and months.”
Investors appeared to like the PSG decision, with Intel’s stock trading at about $36 a share after hours, up about 2 percent.
Mobileye traded at about $40 a share after hours, about flat percentwise.