Intel CEO Pat Gelsinger has another tough call to make, this time about the company’s Accelerated Computing Systems and Graphics (AXG) business tasked with the development of discrete graphics processing units (GPUs) and high-performance computing (HPC) accelerators. While the scars of Intel’s disastrous second-quarter results and closure of the Optane memory business are still fresh, a new report from John Peddie Research calls its GPU business results embarrassing.

Intel’s AXG group, formed in 2016, has consumed a hefty $3.5 billion investment while lagging behind competitors AMD and Nvidia. It’s important to note that even the GPU supply crisis during 2021 and early 2022 couldn’t bolster Intel’s GPU fortunes. During this time, the demand for GPUs peaked in the crypto-currency mining applications.

So, there’s been chatter among industry observers about the imminent $3.5 billion write-off on the AXG unit, leading to the closure of this non-performing GPU business. At the same time, however, another opinion is that Intel will go for a cost- and mission-optimization effort first because GPUs are a must-have item alongside CPUs.

And here comes the dilemma. The GPUs mark a strategic market for Intel in the emerging AI, machine learning, and HPC markets. A hybrid recipe of CPUs and GPUs is also critical for edge computing designs serving the Internet of Things (IoT) applications.

However, can the company afford to keep losing money? According to graphics market researcher Jon Peddie, Intel has missed the bus on scale and time to market. Moreover, it’s operating in a hostile GPU market with much stronger AMD and Nvidia as well as four highly ambitious startups.

Intel’s Gelsinger hasn’t shied away from axing non-performing businesses such as Optane and McAfee. However, the six businesses that Intel has recently closed were known to have collectively lost $1.5 billion, compared to the colossal $3.5 billion losses coming from AXG alone.

While the rumor mill has already been hinting that the party is over for the AXG unit, it’s a tough call for Gelsinger.

By: DocMemory
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