Chipmaker Intel announced on Tuesday its plan to operate its programmable chip unit as a standalone business starting in January. The company also intends to hold a public offering for stock in this new business over the next two to three years. Following this announcement, Intel’s shares increased by more than 2% in after-hours trading.
Intel initially acquired the programmable chip unit when it purchased Altera for $16.7 billion in 2015. These programmable chips are positioned between Intel’s general-purpose chips and specialized chips designed for specific tasks, finding applications in areas such as data encryption and 5G wireless telecommunications equipment.
Sandra Rivera, a long-time Intel executive, will lead the newly established standalone unit, and it will continue to use Intel’s manufacturing facilities to produce its chips. The company has already initiated an extensive internal and external search to find a replacement for Rivera, who currently oversees Intel’s data center and artificial intelligence chip business, competing with industry players like Nvidia and Advanced Micro Devices.
During an investor conference call, Rivera emphasized that the unit is increasingly utilizing Intel’s own factories instead of the facilities in Taiwan where these chips were previously manufactured. Programmable chips have significant relevance in defense applications, including their use in fighter jets.
Rivera also noted the growing customer interest in establishing a more secure and resilient supply chain in North America, particularly among industrial aerospace and defense sector customers. Intel aims to leverage this development to its advantage.
This strategic move by Intel follows earlier actions, such as selling its memory chip unit to SK Hynix and taking part in its Mobileye self-driving car chip unit public. These measures are part of CEO Pat Gelsinger’s strategy to streamline Intel’s operations and generate capital, with the goal of revitalizing its manufacturing capabilities, which had lagged behind competitors like Taiwan Semiconductor Manufacturing Co.
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