Intel to sell 51% stake in Altera to buyout firm Silver Lake for $4.46 billion

Chipmaker Intel is selling a 51 per cent stake in its Altera programmable chip unit to buyout firm Silver Lake, for $4.46 billion, in a deal that values the struggling business at $8.75 billion, roughly half the $17 billion that Intel paid to acquire it in 2015.

The sale is intended to give Altera the operational freedom and help it evolve into one of the largest field programmable gate array (FPGA) semiconductor solutions provider, according to Intel.

Alerta’s programmable chips are easy-to-use and find uses in a range of strategically important segments such as industry, communications, data centre, military, aerospace, and government, besides emerging markets such as AI/edge and robotics.

Altera is a highly scalable business unit with necessary tools to drive FPGA innovation and growth in an AI-driven market. For Intel, the sale will help cut costs and reduce the financial strain from a long period of contract manufacturing.

In the first major restructuring move under new CEO Lip-Bu Tan, Intel will sell off assets, including the stake in Altera, and streamline Intel’s business, helping it to diversify beyond the core business of making PC and server chips to making AI chips.

The sale of Altera stake will help Intel lower expenses, strengthen finances and find the necessary investments needed to strengthen its hold in the market for processors and gain a footing in the AI chips industry.

The stake sale is expected to close on 5 May, following which Raghib Hussain, a former Marvell executive, will take over from Sandra Rivera as Altera CEO.

With Raghib at the helm, Silver Lake hopes to focus on strengthening Altera’s technology leadership position and invest in emerging AI-driven businesses such as edge computing and robotics, Kenneth Hao, chairman and managing partner of Silver Lake, said, adding that the company will continue to work closely with Intel as a strategic partner providing foundry services and customer engagements.

Altera reported revenues of $1.54 billion, with a gross margin of $361 million and operating loss of $615 million in fiscal 2024.