Intel sells majority stake in Altera to Silver Lake

SANTA CLARA, Calif. - Intel Corporation (INTC), currently valued at $86.08 billion, has announced the sale of a 51% stake in its Altera business to private equity firm Silver Lake, a move that values Altera at $8.75 billion and marks its transition to a standalone entity specializing in field programmable gate array (FPGA) semiconductor solutions. According to InvestingPro data, Intel has been quickly burning through cash, with negative free cash flow of $15.66 billion in the last twelve months. The transaction is part of Intel’s strategy to concentrate on its primary business and improve its financial standing.

The deal, expected to close in the second half of 2025, will establish Altera as the largest independent FPGA company. Intel will retain a 49% stake in Altera, allowing it to benefit from Altera’s future growth while refocusing on its core operations. With current revenue of $53.1 billion, Intel remains a prominent player in the semiconductor industry despite recent challenges.

Raghib Hussain will take over as Altera’s CEO, effective May 5, 2025, succeeding Sandra Rivera. Hussain brings a wealth of experience from his previous role as president of Products and Technologies at Marvell and as co-founder and COO of Cavium.

Intel’s CEO, Lip-Bu Tan, expressed confidence in Hussain’s ability to lead Altera forward and highlighted the partnership with Silver Lake as instrumental in accelerating Altera’s initiatives, particularly in AI-driven markets such as edge computing and robotics.

Kenneth Hao, chairman and managing partner of Silver Lake, also emphasized the significance of the investment and the firm’s commitment to reinforcing Altera’s position in the technology sector alongside Hussain’s leadership.

Altera has been a pioneer in FPGA technology for over four decades, providing solutions across various critical industries, including industrial, communications, data centers, military, aerospace, and government. Additionally, Altera is tapping into emerging sectors like AI/edge and robotics.

Upon completion of the transaction, Intel plans to deconsolidate Altera’s financial results from its consolidated financial statements. Altera reported revenues of $1.54 billion, a GAAP gross margin of $361 million, and a GAAP operating loss of $615 million for the Fiscal Year 2024. The non-GAAP gross margin stood at $769 million with a non-GAAP operating income of $35 million. While Intel’s stock currently trades at $19.74, InvestingPro analysis suggests the stock is slightly undervalued. For comprehensive insights and additional ProTips about Intel’s financial health and future prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Morgan Stanley & Co. LLC served as the financial advisor to Intel for this transaction. The information for this article is based on a press release statement.

In other recent news, Texas Instruments faces new challenges as geopolitical tensions between the U.S. and China intensify, following an emergency notice from the China Semiconductor Industry Association. This notice impacts semiconductor companies by determining the origin of chip imports based on where they are fabricated, potentially affecting Texas Instruments’ operations in the Chinese market. Meanwhile, Stifel analysts have identified Texas Instruments and Analog Devices as top picks in the semiconductor sector due to their historical resilience during economic downturns, despite anticipating a reduction in guidance and consensus estimates due to tariffs.

Intel Corporation remains in focus, with KeyBanc Capital Markets maintaining a Sector Weight rating, highlighting Intel’s progress with its 18A node technology and its collaboration with Meta on the Llama 4 models. Despite these advancements, Intel faces challenges with aggressive price cuts for its Lunar Lake CPUs, which may limit gross margin recovery this year. Intel’s partnership with Meta includes support for the Llama 4 models across Intel Gaudi 3 AI accelerators and Xeon processors, emphasizing Intel’s strategic moves in AI technology.

Additionally, the recent tariff developments from China have led to a divergence in U.S. semiconductor stocks. Companies like Advanced Micro Devices and Qualcomm benefit from exemptions due to outsourcing manufacturing to Taiwan, while those with U.S.-based fabrication plants, including Intel and Texas Instruments, may face higher tariffs. The situation underscores the complex global landscape that semiconductor companies must navigate amid ongoing trade tensions.

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