Intel’s New CEO Hands Over Altera For $4.46B After Years of Stalled Growth

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Intel will keep a 49% ownership in Altera, which it stated will allow it to participate in Altera’s expected recovery.

Intel has agreed to sell a 51% share in its Altera programmable chip division to company Silver Lake for $4.46 billion, the first move by new CEO Lip-Bu Tan to help restore the faltering American chipmaker.

One of Intel Corp’s new CEO’s first big moves shows that he is moving quickly to generate revenue from some of the chipmaker’s non-essential assets. However, the company will keep a 49% ownership in Altera, which it stated will allow it to participate in Altera’s expected recovery.

The deal was made on Monday values Altera at $8.75 billion, in contrast to Intel’s $17 billion deal in 2015. The sale will give Altera the much-needed cash after the financial strain caused by former CEO Pat Gelsinger.

Gelsinger wanted to regain Intel’s manufacturing advantage by investing in new factories and concentrating on artificial intelligence (AI), but it did not deliver the desired results.

The company’s ambitious 18A chip manufacturing process faced challenges, as initial tests showed poor chip quality and potential clients like Apple and Qualcomm refused to adopt the technology.

Stifel Research analyst Ruben Roy stated that Intel considers this deal a loss in value but believes it will benefit them in the long run.

Altera produced a field programmable gate array (FPGA) chip that can be modified to meet customer’s needs across various sectors, including telecommunications and the military. Since last year, the chipmaker has been working to spin out Altera.

But, according to Rosenblatt Securities analyst Kevin Cassidy, Altera’s income has dropped since Intel acquired the company in 2015.

Tan’s strategy is to streamline the shedding assets, including Intel’s share in Altera after his predecessor struggled to diversify beyond its core business for years: PC and server chips.

The leadership missteps have left the company struggling to establish itself in the AI industry dominated by Nvidia, while its competitor AMD (Advanced Micro Devices) poses a threat to its dominance in the central processor market.

Tan, who took over after Gelsinger, stated that the announcement to sell Altera programmable chip division shares shows its dedication to redefining its focus, reducing cost structure, and strengthening the balance sheet.

Intel shares rose by 2.8% in the afternoon trading session.

Intel anticipates that the deal will close in the second half of 2025, after which it will deconsolidate Altera’s financial statement from its own.

Raghib Hussain, a former executive at custom AI chipmaker Marvell, will become Altera’s new CEO.

In 2024, Altera’s income was $1.54 billion, just 3% of Intel’s overall sales and an operating loss of $615 million.

After purchasing the company, the chipmaker planned to move Altera’s chip production in-house from Taiwan’s TSMC (Taiwan Semiconductor Manufacturing Company Limited), which was starting to gain an advantage.

However, the lengthy and expensive transition eroded Altera’s market share, allowing competitors like Xilinx, which was later acquired by AMD, to make gains.

Altera’s divestiture happened exactly when Altera’s was showing low sales performance. Hendi Susanto, a portfolio manager at Gabelli Funds (which owns Intel shares), stated that it was not a good time for Altera (referring to the Altera sale).

Some investors see this transaction as more positive: a sign that Intel is focusing on its core businesses.

Initially, Silver Lake was one of the potential suitors eyeing for a stake in Altera.

Bob O’Donnell, chief analyst at Technalysis Research, expressed his expectation that the American company will divest more assets.

Mobileye Global, a company specializing in self-driving technology (of which Intel has a majority stake), is regarded as one of its non-core assets.

CFO David Zinsner suggested at a conference in December that the chipmaker might sell part of its stake in Mobileye over time, saying that it could benefit from the cash.