According to a report from TechNews, citing the Reuters, Silver Lake, Bain Capital and other potential acquirers are planning to acquire a minority stake in Altera, Intel’s programmable chips division.

Altera, a market leader in FPGAs, was acquired by Intel in 2015 for nearly USD 17 billion, with the initial goal of expanding Intel’s presence in the Internet of Things market. However, given Intel’s current financial pressures, Altera has become a business that can be spun off and sold.

Sources indicate that Intel hopes to sell Altera for a price similar to what it paid when acquiring the company in 2015. While it is unclear how much of Altera’s stake Intel plans to sell, any potential deal is expected to be valued at several billion dollars, according to the Reuters.

The Reuters report, citing industry sources, revealed that Intel has started the process of spinning off Altera as a separate company and has begun preliminary steps to sell Altera shares. Sources also noted that while negotiations are still in the early stages, Intel expects to receive initial bids from potential buyers in the coming weeks, according to the report.

In addition to Silver Lake and Bain Capital, the Reuters report mentioned that, citing industry sources, private equity firm Francisco Partners has also shown interest in acquiring a stake in Altera and is expected to be among the bidders.

According to the Reuters, for the quarter ending September 30, Intel announced that Altera’s revenue grew 14%, reaching USD 412 million. During the post-earnings conference call, Intel CEO Pat Gelsinger stated that the company is focused on selling a stake in Altera as part of its path toward an IPO in the coming years. He added that discussions with potential investors are underway, with a conclusion expected in early 2025.

The Reuters report noted that the transaction is expected to provide Intel with a much-needed cash injection. Despite announcing an optimistic revenue forecast in its latest quarterly report, Intel’s stock is down over 50% this year, as the company has missed the AI boom and is facing challenges to turn things around.

Notably, the Reuters report pointed out that before Intel acquired Altera, Altera had many of its chips manufactured by TSMC. Following the acquisition, Intel planned to shift Altera’s chip production to its own factories, while at that time, Intel was beginning to lose its manufacturing lead to TSMC.

According to the report from the Reuters, Intel’s transition of Altera’s production to its own factories proved to be lengthy and expensive. This move contributed to Altera losing market share to its main competitor, Xilinx, which was later acquired by AMD.

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• [News] Intel Reportedly Aims to Raise Billions through Sale of Minority Stake in Altera
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(Photo credit: Intel)

Rumors have been circulating for a while that Intel is considering to sell off its FPGA unit Altera, and later subsided as Altera reiterated that it still eyes an IPO in 2026. However, Intel’s stance of regarding Altera to be a critical part of its core business seems to waver, according to the latest report by CNBC.

Citing sources familiar with the situation, CNBC notes that Intel is seeking to sell at least a minority stake in Altera, a move that could generate several billion dollars in cash for the struggling semiconductor giant.

This week, the company was said to be reaching out to various private equity and strategic investors regarding Altera, according to the sources cited by the report. It is worth noting that Intel has indicated that acquiring a majority stake in the business is also a possibility.

A month ago, CEO Pat Gelsinger mentioned in a press release that Intel is working to carefully manage its cash as the company meaningfully improves its balance sheet and liquidity.

The efforts, in his own words, include selling part of Intel’s stake in Altera, something has been talked about publicly several times and has long been part of its strategy to generate proceeds for Intel on Altera’s path to an IPO.

According to CNBC, Intel aims to strike a deal that values Altera at around USD 17 billion, an amount approximately equivalent to the USD 16.7 billion Intel paid to acquire Altera in 2015.

An Intel representative declined to comment on the matter, according to CNBC.

Qualcomm, another tech giant who has expressed its interest in acquiring Intel, is said to be investigating the possibility of acquiring parts of Intel’s design business to enhance its product portfolio, but the decision might not be made after the U.S. presidential election, according to Bloomberg. Whether the development of the Altera sale would cause an impact to the potential deal remains to be seen.

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(Photo credit: Intel)

Rumors are going around the market about Intel’s next move, as names of big techs, such as Qualcomm, have been brought up as potential buyers. On the other hand, U.S.-based asset management firm Apollo is also said to be showing interest in making an equity-like investment worth up to USD 5 billion in Intel.

However, are the rumors making sense? What would be the wisest decision for Intel to make? Here’s a roundup of the semiconductor giant’s core businesses, and a quick analysis of its next steps.

Intel Might Be Working on Restructuring and Adjustments Months ago

Before Intel’s formal announcement of delaying its German project for two years, the company has actually been carrying out plans for restructuring discreetly and adjusting its strategy in the meantime, which can date back to months ago.

This could be further echoed with Intel’s decision in June to sell a 49% equity interest related to the Fab 34 in Ireland to Apollo. Then, in July, after reporting a loss of USD 7 billion in its manufacturing business for 2023, Intel stated that its investment in France and Italy could not be realized for the time being, and suspended relevant investment plans for chip plants and R&D centers.

Five Core Businesses to Watch: x86 Unlikely to be Sold

Still, the struggling giant has five core businesses, which consists of the following segments: x86 CPUs for the consumer and data center markets, the networking business, Intel Foundry Services (IFS), FPGA unit Altera and Mobileye for automotive driver-assist systems.

Among these, x86 CPU remains the most profitable segment, which is also Intel’s core strength. As the revenue contribution, gross margin, and operating margin of the product line stay healthy, Intel is unlikely to sell the segment in the current scenario.

On the other hand, though Intel has denied the plan to divest a majority stake in Mobileye last week, the self-driving company, which listed on Nasdaq in 2022, would be one of the easiest target for Intel to handle. Industry insiders believe that companies like Japanese semiconductor firm Renesas, U.S. chip giant Qualcomm, Taiwan-based MediaTek, or those aiming to enter the automotive electronics sector could be potential buyers.

As for Altera’s FPGA unit, which also previously denied rumors of being for sale, industry experts suggest that AMD could still be a potential buyer. Acquiring Altera would allow the U.S. chip giant to expand its FPGA product lineup, effectively integrating it with its existing portfolio.

In addition, the networking division could also be sold as a standalone entity, which might be easier for Intel to execute.

What is Qualcomm Eyeing for?                       

The latest reports by The Wall Street Journal and Bloomberg indicate that Qualcomm has reached out to Intel regarding a potential acquisition offer, which would rank as one of the largest-ever technology mergers if the deal were to take place.

However, if Qualcomm were to pursue the x86 business or the entire Intel, it would be a significant financial burden for the U.S. chip maker. Moreover, as a chip design company, Qualcomm would lack the expertise to manage the IFS foundry, while the sector still suffered from significant losses.

Additionally, the deal would require scrutiny from antitrust authorities in various countries, which could be particularly challenging in China.

Therefore, a more feasible option for Qualcomm would be to acquire Mobileye, as the company is already involved in automotive ADAS and infotainment ICs. Acquiring the networking division would be another reasonable choice.

What would be the next page for Intel? To sum up, the 56-year-old semiconductor giant still has solid products, such as the x86 CPUs. Its main issue lies in the slightly deviated strategic direction and execution over the past few years, particularly as it positions itself to compete with TSMC in the most advanced nodes. By addressing these missteps and making proper arrangements afterwards, the company still holds significant value.

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(Photo credit: Intel)

The struggling giant seems to gradually get a turnaround, as Intel reportedly settles down plans for restructuring after the board meeting. Intel, according to a latest report by CNBC, reveals schemes to transform its foundry business into an independent unit with its own board. Moreover, the strategy will allow the foundry business to explore “independent sources of funding,” the report notes.

In a post released on September 16^th, CEO Pat Gelsinger refers to the next phase of Intel’s transformation as “the most significant transformation of Intel in over four decades. Not since the memory to microprocessor transition have we attempted something so essential.”

The plan for its foundry unit to secure outside funding would be critical, as the business has weighed heavily on Intel’s finances, with the company spending around USD 25 billion on it annually over the past two years, CNBC suggests.

It is worth noting that Intel is thinking something even bigger regarding its foundry business, as it is having the ambitious idea that in addition to possibly spinning it off, it may mull to transform the business into a separate publicly traded company, according to a source familiar with the matter cited by CNBC.

The report notes that with the establishment of an independent operating board and a streamlined corporate structure, separating the business becomes significantly easier for Intel, especially compared to the challenge of turning a fully integrated unit into a standalone company.

Along with the decision, other details of Gelsinger’s efforts have surfaced. CNBC notes that the semiconductor heavyweight would also divest a portion of its stake in Altera, according to a memo to the company’s employees.

Regarding its plan on overseas expansion, according to CNBC, citing Gelsinger’s remarks, Intel will delay its fabrication projects in Poland and Germany by roughly two years due to projected market demand. Additionally, the company will scale back its plans for its factory in Malaysia.

Intel’s decision on the delay of the two projects in Europe, partly funded through state aid, would be a heavy blow to EU, as the region tries to boost its domestic semiconductor industry to increase its resilience and independence. The EU Chips Act, in force since September 2023, aims to double Europe’s share of global semiconductor manufacturing to 20% by 2030.

According to a report by EURACTIV, Intel’s €30 billion investment in Magdeburg, Germany, is the largest project envisioned under the EU Chips Act, with one-third of the funding coming from German subsidies. In Poland, Intel’s €4.2 billion project has also been recognized as the “largest investment in Polish history,” with €1.7 billion (PLN 7.4 billion) expected to be provided through state aid.

Notably, as the company proactively pursues the support of the U.S. government, it is holding steadfast on its investments in the country. Intel’s U.S. manufacturing projects will continue as planned, according to CNBC.

Intel plans to invest USD 100 billion over the next five years in new fabs and expansions across Arizona, New Mexico, Ohio, and Oregon, creating 10,000 manufacturing jobs and 20,000 construction jobs.

The semiconductor giant’s Fab 52 and Fab 62 in Arizona are previously scheduled to be completed in 2024. However, The Register notes that the schedule may be delayed a bit, as the fabs are likely to begin operations later this year or in early 2025, targeting to manufacture chips using Intel’s next-generation Angstrom-era process technology, including the 18A node.

The company is slated to receive USD 8.5 billion in grants and USD 11 billion in loans under the 2022 Chips and Science Act, but this funding is contingent on meeting key milestones and undergoing extensive due diligence. However, an official cited by CNBC said that disbursements are anticipated by the end of the year.

(Photo credit: Intel)

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(Photo credit: Intel)

Ahead of Intel’s upcoming board meeting in mid-September, rumors have been circulating that the struggling giant may be mulling to selling its FPGA unit Altera, with AMD and Marvell being potential buyers. However, according to an interview with Altera’s CEO by CRN, Altera’s plan for an initial public offering (IPO) remains unchanged, as it pursues to be listed by 2026.

The information is confirmed by Sandra Rivera, Altera’s CEO. Citing her remarks, CRN notes that the FPGA unit is working on its plan, which involves selling a stake in Altera, not the entire company. Rivera further stated that this has been Altera’s communicated strategy for over a year, with an IPO planned for 2026.

Citing Rivera, the report pointed out that though Altera began operating independently from Intel at the start of 2024, it is still in the process of separating from many of the general and administrative functions of its parent company, with a target completion date of January 1, 2025.

Intel acquired Altera in 2015 for USD 16.7 billion, and the latter dropped its name afterwards, known as the Programmable Solution Group under the U.S. semiconductor giant.

It was not until 2023 that Intel announced its intention to spin off the Programmable Solutions Group into a separate, wholly-owned company. In February, 2024, the FPGA unit announced that it would revive the Altera brand, CRN reported.

The spin-off of the FPGA business is intended to achieve two goals: providing Intel with additional liquidity to fund CEO Pat Gelsinger’s costly revitalization strategy and enhancing the business opportunities for the FPGA company, according to CRN.

Intel’s board is set to meet this week to discuss restructuring plans, which may include separating its design division from its foundry operations. Citing Intel CFO David Zinsner’s comments at an investor meeting last week, a report by CNBC notes that dividing the two businesses would be a logical move, as the company is trying to create more separation between these two businesses.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
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(Photo credit: Intel)