Intel has decided to sell a majority stake in its programmable solutions group, Altera, to the private equity firm Silver Lake. This move signifies a major shift as Altera is spun off as an independent company. Intel is absorbing significant losses from this transaction, having initially acquired Altera in 2015 for $16.7 billion, while the current deal values Altera at $8.75 billion, with Intel receiving only $4.4 billion.
Under the terms of this agreement, Silver Lake will hold a 51% stake in Altera, which continues to offer a range of field-programmable gate array (FPGA) products across various industries, including automotive, communications, and data centers. Sandra Rivera, who recently led the division, will be succeeded by Raghib Hussain as the new CEO of Altera effective early May.
This divestiture aligns with Intel’s new operational strategy under CEO Lip-Bu Tan, who indicated a focus on core technology and strengthening the company’s balance sheet. The decision comes in light of Intel’s previous missteps in managing acquisitions related to AI technologies, exemplified by its experience with Altera. Analysts noted that while AMD’s acquisition of Xilinx has proven beneficial, Intel’s management of Altera has been criticized as lacking, contributing to its decline in valuation.
Jim McGregor, chief analyst at Tirias Research, acknowledged the surprise surrounding the sale but recognized that it reflects a necessary step for Intel to recover financially. The deal is expected to conclude in the latter half of this year, with expectations that Silver Lake’s expertise will enhance Altera’s market position and performance.
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