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X-Gene Gains New Life in Spinoff

December 5, 2017

Author: Linley Gwennap

X-Gene is back in action now that Macom has completed a spinoff of its Compute business. The team and products are now part of a standalone company currently known as Project Denver Holdings (no relation to the Nvidia CPU design of the same name). Although the new company hasn’t disclosed any plans, we expect it to relaunch the X-Gene 3 processor to compete against Qualcomm’s Centriq and other cloud-server chips.

X-Gene’s ownership has been in limbo since late last year, when Macom announced plans to acquire AppliedMicro (APM) for its networking chips but said it would sell the Compute business unit. But as interest evaporated, Macom instead sought to spin off the unprofitable business to avoid paying its ongoing losses. After reducing the price tag to zero, the company finally found a willing partner in the Carlyle Group, an investment firm that runs a $13 billion buyout fund. Carlyle will run Project Denver and fund the business until it becomes profitable. Macom received no cash from the deal but holds about 18% equity in the new company.

Who will lead this turnaround remains unclear. The company put a new management team in place before finalizing the spinoff, but it withheld the identities of the new CEO and other executives. Many of the lower-level staff remain in place; this team is working to qualify X-Gene 3, which sampled earlier this year. We expect the company to relaunch in 1Q18, when the 32-core processor should be ready for production. At that time, it’s likely to disclose a new company name and a new roadmap.

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