Reported by our reporter Li Yuyang from Shanghai
There has been a slight change in the relatively stable field programmable gate array (FPGA) market, which is not popular.
Recently, semiconductor giant Intel announced that it will operate its Programmable Solutions Division (PSG) as an independent entity starting from January 1, 2024, and plans to conduct an initial public offering (IPO) within two to three years after the spin off.
It is reported that Intel PSG is mainly aimed at the FPGA market, which has the characteristics of programmability, low power consumption, and parallel computing, and is widely used in various fields such as communication, data centers, industry, automotive, and aerospace. This will give PSG the independence it needs to continue expanding its share in the FPGA market, "said Intel CEO Pat Kissinger.
A reporter from China Business Daily noticed that Intel has an FPGA China Innovation Center in Chongqing, which is Intel's largest global innovation center focused on FPGA technology and ecology, and also Intel's only FPGA innovation center in the Asia Pacific region. Has the responsibility and ownership of the FPGA Innovation Center changed after the independent operation of Intel PSG? Regarding this, the reporter contacted Intel China and said, "There is currently no further information disclosed
Zhao Dianfeng, former General Manager of Altera China, said, "From a capital operation perspective, going public through a spin off is a routine operation. As a general-purpose hardware platform, FPGA's global market capacity is not very large and will increase in the future, but it will not be as large as CPUs (central processing units) or GPUs (graphics processors)
Behind Intel's Intensive Adjustments
It is understood that the largest FPGA manufacturer currently is Xilinx, which has been acquired by AMD. The second largest manufacturer is Altera, which was acquired by Intel for $16.7 billion in 2015. At that time, it could be considered the largest acquisition in Intel's history, which is now PSG.
In fact, PSG has consistently performed well within Intel and has a mature business model and stable customer base. During the 2023 Q2 financial report conference call, Intel specifically emphasized that the revenue of the PSG business unit increased by 35% year-on-year, setting a new historical high for three consecutive quarters. PSG launched Intel Agilex in the second quarter of this year? 7 R-Tile, which is Intel's first FPGA with PCIe 5.0 and CXL functionality.
However, with the intensification of market competition and the acceleration of technological updates, PSG is also facing certain challenges and pressures. Intel stated that although PSG is independent, PSG and Intel OEM Services (IFS) will still maintain strategic alignment; PSG's Supply Resilience Program pilot has been very successful, and on this basis, cooperation with IFS will also enable PSG to provide better supply predictability to customers based on their needs, ensuring a more resilient supply chain.
The market generally believes that through this spin off, PSG will gain more opportunities and resources to expand the market, develop new products, and improve service levels, in order to better meet customer needs and achieve sustained growth. It should be pointed out that although PSG is spun off and independent, Intel still retains most of its equity, similar to its trading practices on Mobileye and IMS.
In 2022, Intel spun off Mobileye, its auto drive system solution company, and went public; Not long ago, Intel announced that it would sell 20% and 10% equity of multi beam direct writing lithography equipment manufacturer IMS to Bain Capital and TSMC for $860 million and $432.8 million respectively. The multi beam mask writer provided by IMS is an important part of ensuring the operation of the EUV process.
After Mobileye's spin off and listing, Intel still retains over 88% of its equity. Since its listing on NASDAQ in October 2022, Mobileye has a current market value of $32.9 billion, which means Intel's shareholding market value has reached $28.95 billion, equivalent to 18.8% of Intel's current market value of $154.29 billion, and is a good way to release value for shareholders.
Kissinger also pointed out in the announcement that the spin off of PSG for listing is Intel's ongoing move to release value for shareholders. The gross profit margin of FPGA is quite high, and Xilinx's gross profit margin can reach 70%. Altera uses Intel's OEM factory, which has a relatively lower cost advantage than TSMC, but its gross profit margin is also very high. Intel's stock price trend has not been good in recent years, and its market value is not very high. Perhaps after PSG's independent IPO, its market value can reach a certain level, which in turn can provide Intel with a lot of cash flow and benefit its future work There are benefits to art research and development Zhang Guobin, CEO of Electronic Innovation Network, stated.
Splitting PSG, like splitting Mobileye, may help accelerate Intel IDM 2.0 strategy. In 2021, after returning to Intel as CEO, Kissinger proposed the IDM 2.0 strategy, which includes significant capacity expansion, making Intel the most capable major supplier of OEM in Europe and America, to serve global customers, and expanding Intel's use of external OEM factories to supply other products.
How can domestically produced companies break through?
In some specific fields, compared to general-purpose chips such as CPUs and GPUs, FPGA has higher execution efficiency, lower latency and energy consumption; FPGA can adapt to changes through repeated programming, with advantages such as short development cycle, high flexibility, and lower cost for small batch shipments.
With the development of technology and the emergence of more new application scenarios, FPGA has become more and more abundant in downstream applications, including communications, data centers, automotive electronics, artificial intelligence and other fields, while the gradual landing of a large number of applications such as big data, the Internet of Things, 5G, AI and so on, as well as the sudden arrival of the COVID-19 epidemic in 2020, have enhanced the sense of FPGA presence. For example, it took Dyson 10 days to rush out of the ventilator, It uses Intel FPGA chips.
After independence, Sandra Rivera, who served as the CEO of PSG and also the Executive Vice President of Intel, said, "Our strategic relationship with Intel provides us with the greatest flexibility in dealing with rapidly growing markets such as automobiles, data centers, and communications
In these FPGA application scenarios, communication and industry are the main application areas in the Chinese market. According to Frost& According to Sullivan's data, the market size of FPGA chips in the Chinese communication industry in 2022 is 8.67 billion yuan, and it will reach 14.04 billion yuan by 2025.
Huawei has always been one of the super large customers of FPGA, especially in Huawei's operator business. Many solutions are mostly designed and implemented based on FPGA from Xilinx and Intel in the United States, but currently there is no domestically produced FPGA that can replace high-end FPGA from the United States.
Looking globally, the entire FPGA market is almost monopolized by the three giants AMD (Xilinx), Intel (Altera), and Lattice. According to Gartner statistics, the market share of Xilinx, Intel, Lattice, and Microchip in 2021 reached 51%, 29%, 7%, and 6%, respectively.
In contrast, domestic FPGA manufacturers can only seek development in the narrow market gap; Frost& According to Sullivan's data, the total market share of the three major overseas manufacturers in China was about 96% in 2019, and it is expected that the proportion of foreign investment will still be high to this day. At present, domestic FPGA manufacturers mainly include Fudan Microelectronics, Ziguang Tongchuang, Anlu Technology and other manufacturers, with the highest product process reaching 28nm and above, and the main sales products are concentrated in lower process.
According to the research report of Zhejiang Securities, each company has different technological reserves, development paths, and target markets. Fudan Microelectronics was established at the earliest time, first launching a billion gate FPGA product in China, with full process independent intellectual property rights and FPGA supporting EDA tools; Ziguang Tongchuang is the only manufacturer in China that covers the application needs of the high-end, mid-range, low-end and other multi-level FPGA markets. Its products cover fields such as communication networks, information security, artificial intelligence, data centers, industry, and the Internet of Things.