Intel: Billions in business against the crisis

The ailing US chip company Intel has agreed to sell a 51% stake in Altera, a manufacturer of ASICs and programmable integrated circuits, to the US private equity firm Silver Lake for USD 4.46 billion. Market observers see the sale as the first major step by new Intel CEO Lip-Bu Tan towards overcoming the group's severe crisis.

The deal, which was reported on Monday by the news agency Reuters, among others, values Altera at “only” 8.75 billion US dollars. Intel had paid 16.7 billion US dollars for the takeover of the FGPA specialist in 2015. Altera recorded sales of USD 1.54 billion in 2024, which corresponds to just three percent of Intel's total sales, according to Reuters, and an operating loss of USD 615 million. Given Altera's sales performance, this is certainly not the best time for a sale. On the other hand, the deal will provide Intel with much-needed cash, according to Reuters.

The sale of assets, including Intel's stake in Altera, is at the heart of Tan's strategy to streamline the chipmaker. Tan returned to Intel in March. He not only took over the chief executive position, but also a seat on the board of directors again. “I see significant opportunities to reshape our business to better serve our customers and create value for our shareholders,” said Tan on the occasion of his appointment.

Intel in crisis

Intel has been in troubled waters for years, not least because the company has fallen behind the world's leading chip manufacturers in state-of-the-art manufacturing processes. The company continues to be in the red. To cut costs quickly, the struggling semiconductor group has resorted to drastic job cuts. Around 15,000 jobs – around 15 percent of the workforce – are to be cut. At the beginning of December 2024, Intel retired its CEO Pat Gelsinger. He had invested billions to establish Intel Foundry, the ailing company's contract manufacturing business, as a competitor to Taiwanese industry leader TSMC. This put a strain on Intel's finances, but did not bring the hoped-for success. Intel's interim co-chief executives have mothballed the planned AI chip. Above all, however, Intel desperately needs capital to overcome the corporate crisis.

Preparations for a sale of Altera were already made at the beginning of last year, when Intel revived Altera as an independent company. Altera is a specialist in programmable chips that can be used for various purposes in industries ranging from telecommunications to the military. Later, reports emerged that Intel was planning to sell part of its FPGA division. There were also rumors of a possible IPO of Altera or a sale to competitor Marvell. Instead, the sale of a majority stake in Silver Lake. “Today's announcement reflects our commitment to sharpen our focus, reduce our cost structure and strengthen our balance sheet,” Tan is quoted as saying by Reuters. The transaction is expected to be completed in the second half of this year.

(akn)