Intel to divest 51% stake in Altera for $4.46 billion to Silver Lake amid cost cuts, stock down 17% in one month

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.

Intel agreed in 2015 to pay $16.7 billion for Altera, whose multiuse chips are primarily deployed in telecommunications networks. In 2024, the US chipmaker said it would look to sell a stake in Altera — part of a broader plan to turn its business around. Altera drew interest from Lattice Semiconductor Corp. and a group of buyout firms, Bloomberg News has reported.

Intel has lost market share to rivals in recent years and missed the shift to artificial intelligence accelerators, a market now dominated by Nvidia Corp. Intel’s board ousted Chief Executive Officer Pat Gelsinger last year after his comeback plan was slow to gain momentum.

Tan, who recently stepped into the role of CEO, said about two weeks ago that the chipmaker will spin off assets that aren’t central to its mission, and create new products including custom semiconductors to try to better align itself with customers.

Intel needs to replace the engineering talent it’s lost, improve its balance sheet and better attune manufacturing processes to meet the needs of potential customers, Tan told attendees at a company conference. He didn’t specify which parts of Intel were no longer key to its future.