Intel’s Programmable Solutions group
In the previous part of the series, we saw that Intel’s (INTC) memory business is likely to turn from losses to profits as 3D NAND starts contributing towards the revenue. However, the company’s PSG (Programmable Solutions group) has been profitable. This group was created with the acquisition of Altera. PSG supplies FPGAs (field programmable gate arrays) to a broad range of consumers and competes directly with Xilinx (XLNX).
After the acquisition by Intel, Altera’s revenue has grown every quarter on a YoY basis for the past three quarters. However, Xilinx is growing faster than Alera, as the former has a one-year lead over the latter. Intel’s PSG revenue rose 6% YoY (year-over-year) to $425 million in fiscal 3Q16, whereas Xilinx revenue rose 10% YoY during the same period.
Xilinx versus Altera
With its 16-nm (nanometer) products, Xilinx is one year ahead of Altera as the latter launched its Stratix ten FPGA based on the 14-nm (nanometer) node in October 2016. Xilinx has already started work on its 10-nm product.
Xilinx is not only competing with Intel on the advanced node front, but also on the cloud solution front. Recently, Xilinx unveiled its RAS (reconfigurable acceleration stack), which takes a stack of FPGAs and connects it with hyperscale architecture to accelerate key cloud and data center workloads. This strategy is quite different from the earlier method of pairing FPGAs one by one with each processor.
Will Xilinx overtake Altera in the cloud market?
Microsoft (MSFT) has deployed Altera’s FPGAs using the second method of pairing one FPGA with one processor. However, Amazon Web Services (AMZN) is adopting Xilinx’s strategy of pooled FPGAs in its F1 instance cloud service. This win may put Xilinx ahead of Altera in the cloud market as Amazon has a dominant 31% market share, whereas Microsoft (MSFT) has an 11% market share, according to Synergy Research Group.
Intel expects more than 33% of cloud compute nodes to adopt FPGAs by 2020. With the win from Amazon, it appears that Xilinx may take a larger share of this growing market.
If Xilinx’s RAS proves to be a success, Altera may also offer similar solutions to tap the opportunity. Intel’s current strategy is to integrate FPGAs inside its processors used for artificial intelligence.