Quick answer: OptiScaler community builds now run AMD's FSR 4.1.2 upscaling on Intel Arc XMX hardware. Community benchmarks show FSR 4.1.2 Lite costing about the same as XeSS SR, and testers report better image quality, but the mod is experimental.
AMD's FSR 4.1.2 upscaling can now run on Intel Arc GPUs using their dedicated XMX AI cores. The work comes from the OptiScaler modding community, which has been testing modified FSR 4 INT8 files built for Intel's Xe Matrix Extensions. FSR 4 could already run on unsupported GPUs through OptiScaler, but using the XMX hardware makes it much more efficient than running it on regular shaders.
The most interesting version for lower-power hardware is FSR 4.1.2 Lite, a smaller INT8 model aimed at mobile chips, handhelds and APUs. In community benchmarks reported by Wccftech, an Arc B580 running Clair Obscur: Expedition 33 at 1080p on the Balanced preset needed 0.59 ms for FSR 4.1.2 Lite, compared with 0.58 ms for XeSS SR, while the full FSR 4.1.2 model took 0.85 ms. On an Arc A770 in The Witcher 3 Remastered at 1080p Quality, FSR 4.1.2 Lite hit 101.5 FPS against 101.1 FPS for XeSS SR.
Several testers say FSR 4.1.2 looks noticeably better than XeSS SR. One user who tried it on an Intel-based handheld across several games reported nearly identical framerates with clearly better image quality. These are community claims, though, and Wccftech notes they still need controlled comparisons across more games and settings.
It's experimental for now. Game compatibility varies, users have reported crashes in some titles including Crimson Desert, and it currently relies on a DirectX 12 path, with more limited support for other APIs. Development is being discussed on the OptiScaler Discord.