Analyst estimates Intel's GPU division has accumulated 3.5 billion dollars in losses with speculation about divestiture.

Jon Peddie, head of Jon Peddie Research, a leading graphics market analysis firm that has been around for nearly 40 years, suggests that Intel might axe its Accelerated Computing Systems and Graphics Group (AXG). The division has been bleeding money for years and has failed to deliver a competitive product for any market segment that it serves. Jon Peddie estimates that Intel has invested about $3.5 billion in its discrete GPU development—investments yet to pay off. In fact, Intel's AXG has officially lost $2.1 billion since its formal establishment in Q1 2021. Given the track record of Pat Gelsinger, Intel's chief executive who scrapped six businesses since early 2021, JPR suggests that AXG might be next. "Gelsinger is not afraid to make tough decisions and kill pet projects if they don't produce—even projects he may personally like," Peddie wrote in a blog post.

When Intel disclosed its plans to develop discrete graphics solutions in 2017, it announced plans to address computing, graphics, media, imaging, and machine intelligence capabilities for client and datacenter applications with its GPUs. Five years into its discrete GPU journey, the company has released two low-end standalone GPUs addressing cheap PCs and some datacenter applications; cancelled its Xe-HP GPU architecture for datacenter GPUs; postponed multiple times shipments of its Ponte Vecchio compute GPU for AI and HPC applications (the most recent postponement was partly due to the late arrival of the Intel 4 node); and delayed the launch of an Xe-HPG ACM-G11 gaming GPU by about a year. Considering how late to market Intel's Arc Alchemist 500 and 700-series GPUs are already and the fact that they will have to compete against AMD's and Nvidia's next-generation Radeon RX 7000 and GeForce RTX 40-series products, it is highly likely that they will fail, which will obviously increase Intel's losses.

However, Intel's own Habana Gaudi2 deep learning processor shows rather tangible performance advantages over Nvidia's A100 in AI workloads, a market for Intel's Ponte Vecchio. This success might tip the scales toward maintaining the program. Peddie noted: "It is a 50–50 guess whether Intel will wind things down and get out. If they don't, the company is facing years of losses as it tries to punch its way into an unfriendly and unforgiving market."

Despite the financial losses, Intel pursues several strategically important directions with its AXG division. Without a competitive GPU-like architecture that could serve everything from a low-end laptop to a supercomputer, Intel will not be able to address many new growth opportunities. Without further evolution of Intel's Xe-HPC datacenter GPU architecture, the company will not be able to build hybrid processing units for AI/ML and HPC applications such as Falcon Shores. Without such XPUs, Intel's ZettaFLOPS by 2027 plan starts to look increasingly unrealistic. If Intel pulls the plug on standalone GPU development, it will have to find a provider of a competitive GPU architecture for its client processors, as a small in-house iGPU development team within Intel will hardly be able to deliver an integrated graphics solution competitive against those offered by AMD and Apple for their client system-on-chips. While Intel's discrete GPU endeavor has not lived up to expectations, Intel needs an explicitly parallel compute architecture for loads of upcoming applications, making the decision to kill AXG far from straightforward despite the mounting losses.