Intel to sell majority stake in Altera for $4.46 billion to fund revival effort

Altera generated revenue of $1.54 billion in 2024, a mere 3% of Intel's total sales, and posted an operating loss of $615 million.

Intel has agreed to sell a 51% stake in its Altera programmable chip business to buyout firm Silver Lake for $4.46 billion, in the first major move under new CEO Lip-Bu Tan to revive the struggling American chipmaker.

The deal values Altera at $8.75 billion, nearly half the roughly $17 billion Intel paid for it in 2015, and is expected to close in the back half of 2025. Raghib Hussain, a former Marvell executive, will take over as Altera CEO on May 5.

The sale will give Intel a cash boost as the once-leading chipmaker cuts costs after hefty bets on contract manufacturing under former CEO Pat Gelsinger strained its finances.

"Today's announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet," said Tan, who took the helm after Gelsinger's ouster in December.

Shedding assets including the stake in Altera is at the center of Tan's strategy push to streamline Intel, after predecessors struggled to diversify it beyond its core PC and server chip business.

The company has been struggling to gain a footing in the AI industry dominated by Nvidia while rival AMD threatens its stronghold of the central processor market.

Since last year, Intel has taken steps to spin-out Altera, which makes programmable chips that can be used in industries ranging from telecom to the military, as a separate unit.

It expects to deconsolidate Altera's financial results from its own after the deal.

CORE BUSINESS FOCUS

Altera generated revenue of $1.54 billion in 2024, a mere 3% of Intel's total sales, and posted an operating loss of $615 million.

"The divestiture of Altera is at a market down-cycle and at the bottom of Altera's sales performance. It is not the best time to sell Altera's stake," said Hendi Susanto, a portfolio manager at Gabelli Funds which holds Intel shares.

Still, "some investors may see the transaction more positively in terms of Intel strengthening its focus on its core businesses."

Reuters had first reported in November Silver Lake was among potential suitors competing for a stake in Altera.

Bob O'Donnell, chief analyst at Technalysis Research, said he expects to see Intel divest more assets.

Self-driving tech firm Mobileye Global, which Intel holds a majority stake in, is considered to be among its "non-core" assets.

CFO David Zinsner had indicated at a conference in December that Intel could sell some of its position in Mobileye over time, saying Intel could "use the cash".