AXG has accumulated losses of $2.1 billion since its establishment in 2021Q1

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In the second quarter of the 2022 financial report, Intel’s revenue and profit were lower than expected. There was a severe decline, prompting Intel to jettison several money-losing non-essential businesses, such as Optane, which has been losing money since 2017. Since Pat Gelsinger took over as CEO, Intel has divested six non-core businesses, reducing operating costs and losses by $1.5 billion.

The head of market analysis agency Jon Peddie Research said that if Intel’s financial situation continues to deteriorate, and the Accelerated Computing and Graphics division (AXG) has been unable to deliver competitive products and turn a profit, it could be the next division to be cut.

Intel began to form a GPU team in 2016 to seek breakthroughs in the discrete graphics and data center markets, Raja Koduri was hired from AMD in 2017 and publicly disclosed its discrete graphics card development plans, and the development team’s recruitment has continued until 2021. Intel has spent about $3.5 billion developing GPUs for this, and those investments need to pay off. According to statistics, the accelerated computing and graphics business unit has accumulated losses of $2.1 billion since its establishment in the first quarter of 2021.

Since Intel started preparing for the GPU project six years ago, Nvidia and AMD have updated three generations of products in the past six years, and are developing GPUs with higher performance and more functions. At the same time, there are many emerging GPU design companies, four of which are in China and two in the United States. The design ideas and development laws of GPUs have also changed, and the funds invested by Intel seem to be unable to really start the project. Faced with long-term losses and an inability to address new growth opportunities, Intel is in a dilemma.

Jon Peddie Research believes that Intel will face a 50-50 choice, and the GPU business may continue to lose money for several years because it is trying to penetrate an unfriendly and unforgiving market.

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