The MACDThe MACD indicator is essentially a momentum indicator that shows the relationship between two different moving averages of price. The MACD is the difference between the 12-period ... More on the daily chart of Intel INTC stock is rounding up as the company announced its intent to spin off its programmable solutions group.
In order to concentrate on its core businesses, Intel (INTC) is seeking to streamline its operations as part of its transformation into a major semiconductor manufacturer in the US. The company is also looking to raise money to help fund the construction of new factories.
By announcing its intention to turn its Programmable Solutions Group (PSG) into a stand-alone company through an IPO, INTC made another significant advancement in this evolution. The IPO, which isn’t anticipated to go public for another two or three years, would not only aid in releasing value for the PSG business, but it could also strengthen INTC’s competitiveness in its Client Computing Group (CCG) and Data Center and AI Group (DCAI) segments.
A year ago, INTC successfully completed the spin-off of the autonomous vehicle technology company Mobileye (MBLY), which was also carried out through an IPO. Both stocks have performed well since the action, which was largely praised by market participants. While MBLY has soared by nearly 90 percent, INTC has increased by about 30 percent, largely due to a stabilization in the PC market.
Field programmable gate arrays, or FPGAs, are specialized chips that are produced by the PSG business, which was established when INTC acquired Altera for approximately $16 billion in 2015 and reported revenue of $484 million in 4Q21. These chips are used in industrial, military, and aerospace applications and can be programmed even after they have been installed in machinery.
Field Programmable Gate Arrays (FPGAs) are integrated circuits that can be programmed and reprogrammed by users to perform various digital functions. Unlike Application Specific Integrated Circuits (ASICs), which are designed for specific tasks, FPGAs are flexible and can be customized for different applications. FPGAs consist of an array of configurable logic blocks (CLBs) interconnected through programmable interconnects. These CLBs comprise look-up tables (LUTs) that can implement any logical function, flip-flops for storing data, and other components like multiplexers and arithmetic units. The interconnects allow for the routing of signals between different blocks. Users can program FPGAs using hardware description languages (HDLs) like Verilog or VHDL. The programming defines the desired functionality of the FPGA by specifying how the logic blocks should be interconnected and how they should behave. Once programmed, the FPGA can perform the specified tasks and operate as a digital circuit.
However, PSG’s opportunities with the FPGAs were not sufficiently addressed by INTC, which limited the company’s growth. PSG will be able to more fully realize its growth potential as a stand-alone business led by Sandra Rivera, who is presently an Executive Vice President at INTC.
By continuing to hold a majority stake in the business after the IPO, INTC can benefit from PSG’s faster growth. In addition, INTC can increase its US manufacturing capacity with the money raised from the IPO. More of INTC’s workforce and resources could be devoted to improving the company’s core CCG and DCAI operations. To close the technological and competitive gap that has grown over the past few years is one of INTC’s top priorities. Naturally, a key component of that strategy will be enhancing its AI capabilities to compete more effectively against Advanced Micro Devices (AMD) and NVIDIA (NVDA).
As INTC continues with its expansion plans for chip manufacturing, the choice to spin-off the PSG business marks the next significant step in its transformation. A PSG spin-out would help unlock parts of Intel’s non-core operations and provides them an autonomous platform to focus and attract external investments.
Intel price target raised at Northland
Following the company’s announcement that it is separating PSG into a standalone business in anticipation of a potential IPO in a few years, Northland increased the price target on Intel (INTC) to $56 from $45 on October 4, 2023, and kept an Outperform rating on the shares. Intel will consist of a foundry, two fabless businesses, Mobileye (MBLY), and an equipment business in a few years. The analyst asserts that each share of these distinct companies is worth $56 per share.
Intel Corp is a multinational corporation that develops and manufactures electronic devices, primarily computer processors and related technologies. It designs and produces microprocessors, chipsets, and system-on-chips (SoCs) used in laptops, desktops, servers, and other computing devices. Intel also provides software and platforms for various applications, including artificial intelligence, autonomous driving, cloud computing, and the Internet of Things (IoT). Additionally, the company offers networking and communication products, memory and storage solutions, and semiconductor components for various industries.
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