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Chipmaker Intel Corporation might be looking to shut down its graphics processing unit (GPU) department due to heavy losses that have accumulated over the years according to a fresh market research report from John Peddie Research. The group is a relatively new one at Intel, which is one of the oldest chip companies in the world. It focuses its attention on developing and manufacturing GPU products, as opposed to the traditional computing CPUs that have come to be associated with Intel.
JPR estimates that shutting down the Accelerated Computing Systems and Graphics (AXG) group will result in a $3.5 billion write off by the company, as the division is yet to make a profit and Intel has invested $3.5 billion in it since it was set up, with the company starting to include the segment on its balance sheet from the first quarter of last year.
Intel Ready To Call It Quits With GPU Development After Investing $3.5 Billion
Today's report, if it bears fruit, will result in another market being out of reach for Intel, which is one of the world's largest and oldest chipmakers. The company is known for having refused to manufacture processors for smartphones in the early days of the industry and then lamenting later for having missed the train. Intel also sold its fifth generation (5G) mobile modem portfolio to Apple, and now, the company might do away with its GPU division as well.
JPR's report does not cite any official sources, and it only uses rumors to guess if Intel's chief Mr. Patrick Gelsinger will continue on his streak of shutting down unprofitable businesses by taking aim at its GPU division next.
In a blog post, JPR's founder John Peddie outlines that:
So, the rumor mill has been hinting that the party is over and that AXG would be the next group to be jettisoned.
He goes on to argue that shutting down the GPU department will make sense for Intel as the segment is yet to make any profits. Peddie estimates that since its inception, the AXG group has cost Intel $3.5 billion in investments, and it has little to show for this in earrings. He also calls Intel results with its GPUs "an embarrassment, with little adoption in the market and average performance in benchmarks.
The analyst believes that competition from NVIDIA, AMD and startups implies that Intel should ax the AXG group next. He states that:
Should Intel dump its AXG group? Probably. The company started the project six years ago. Since then, AMD and Nvidia have brought out three generations of new and stunningly powerful dGPUs, and more are in the pipeline. Four new companies have started up in China, and two new ones announced in the US. Intel is now facing a much stronger AMD and Nvidia, plus six start-ups—the rules of engagement have dramatically changed while Intel sunk money into projects it can’t seem to get off the ground.
. . .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. The company can’t continue to carry an enormous payroll, pay a competitive fab for wafers, and then ask governments to subsidize its investments in new fabs that can’t even build the parts they are presumably designing. Not only is that a bewildering investment strategy, but it’s also an embarrassment.
However, he remains divided on whether Intel will actually shut down the department, believing that if it doesn't do so, then it will continue to operate in a highly hostile market