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, announced on Monday, values Altera at $8.75 billion, a sharp decline from the nearly $17 billion Intel paid in 2015.
The sale will provide Intel with a cash boost as the once-leading chipmaker aggressively cuts costs after heavy investments to become a contract manufacturer under former top boss Pat Gelsinger strained finances.
Shedding assets, including Intel's stake in Altera, is at the center of Tan's strategy to streamline the chipmaker after several CEOs in the past failed to diversify beyond the company's mainstay PC and server chip business for years.
The leadership missteps have left Intel struggling to gain a footing in the AI industry dominated by Nvidia while rival AMD threatens its stronghold of the central processor market.
"Today's announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet," said CEO Tan, who took the helm after Gelsinger's ouster in December.
Since last year, Intel has taken steps to spin Altera out as a separate unit. Altera makes programmable chips that can be used for various purposes in industries ranging from telecom to the military.
The deal is expected to close in the second half of 2025, after which Intel expects to deconsolidate Altera's financial results from Intel's statements.
Raghib Hussain, who was an executive at custom AI chipmaker Marvell Technology (MRVL.O), will succeed Sandra Rivera as Altera CEO from May 5.
Altera generated revenue of $1.54 billion in 2024, a mere 3% of total sales, and posted an operating loss of $615 million.
After buying Altera in 2015, Intel had planned to move Altera's chip production into its own factories from rival TSMC (2330.TW) which was at the time starting to gain a technological edge.
However, Altera lost market share to its top rival, Xilinx, which was acquired by AMD, as the transition to Intel's factories was long and costly.
Reuters had first reported in November Silver Lake was among potential suitors competing for a stake in Altera.
