Intel is reportedly in exclusive discussions with private equity firm Silver Lake to sell a majority stake in its programmable chip unit, Altera. This move is part of Intel’s broader strategy to divest non-core assets and refocus on its foundry business amid financial pressures.
Intel’s Strategic Shift: Selling Altera for Cash Infusion
Intel acquired Altera in 2015 for $16.7 billion to bolster its data center and IoT portfolio. However, nearly a decade later, the semiconductor giant is now considering a significant sale as it restructures operations to cut costs and improve financial stability. Reports suggest that selling a stake in Altera could provide Intel with a much-needed cash influx as it navigates declining revenues and increased competition in the chip market.
Exclusive Talks with Silver Lake, Bain Capital Showed Interest
Sources indicate that Silver Lake, a renowned technology investor, is in exclusive negotiations with Intel, aiming to secure a majority stake in Altera. Previously, Bain Capital also explored acquiring the business, but discussions did not materialize into a deal. This potential transaction aligns with Intel’s ongoing cost-reduction efforts, including a recent workforce reduction of 15% as part of a multi-billion-dollar savings plan.
Intel’s Struggles: Declining Revenue and Leadership Changes
Intel has been facing financial struggles, with bleak Q2 2024 results prompting significant cost-cutting initiatives. The company is aggressively optimizing its portfolio by offloading assets that no longer align with its core focus. These struggles have also led to major leadership changes, including the departure of CEO and board member Pat Gelsinger late last year.
Qualcomm’s Interest and Previous Sale Rumors
Intel’s programmable chip business has been the subject of sale rumors for months. In September 2024, US chip giant Qualcomm reportedly explored a deal to acquire a stake but ultimately walked away due to the complexity of the transaction. The ongoing discussions with Silver Lake could pave the way for a full exit from Altera, signaling a major shift in Intel’s long-term business strategy.
With Intel streamlining operations and focusing on its foundry ambitions, the potential sale of Altera could mark a pivotal moment in the company’s turnaround efforts. Industry watchers are closely monitoring the developments as Intel looks to realign its business and regain its competitive edge in the semiconductor sector.
