TLDR
- Intel stock rose 2.6% in pre-market trading on reports of Altera unit sale to Silver Lake
- Deal could value Altera at around $9 billion, well below $17 billion Intel paid in 2015
- Announcement expected as early as this week as part of ongoing restructuring
- New CEO Lip-Bu Tan exploring foundry expansion to make chips for NVIDIA and others
- Intel recently completed $1.9 billion sale of NAND memory business to SK hynix
Intel shares jumped in pre-market trading Monday after Bloomberg News reported the chipmaker is close to selling a majority stake in its programmable chips division, Altera, to private equity firm Silver Lake Management.
The stock climbed 2.6% as investors reacted positively to the potential deal.
This sale would mark another step in Intel’s ongoing effort to streamline operations by divesting non-core businesses.
An announcement could come as soon as this week, according to sources familiar with the matter.
Intel purchased Altera in 2015 for approximately $17 billion. The unit specializes in multi-use programmable chips that are widely used in telecommunications networks.
The potential deal with Silver Lake may value Altera at roughly $9 billion, representing a substantial discount from Intel’s original purchase price.
Restructuring in Full Swing
The reported Altera sale comes amid a broader restructuring initiative at Intel.
Earlier this year, Intel completed the sale of its NAND memory technology and manufacturing business to South Korean tech company SK hynix for approximately $1.9 billion.
These moves reflect Intel’s strategy to shed less profitable divisions while refocusing on core growth areas.
Several companies have reportedly shown interest in acquiring the Altera business. These include Lattice Semiconductor Corp and various private equity firms.
The semiconductor market has been volatile recently, partly due to new tariffs imposed by the Trump administration on imported goods, particularly those from China.
These tariffs have negatively impacted global stocks, including major tech companies heavily invested in artificial intelligence.
New Direction Under Tan
Intel’s new CEO, Lip-Bu Tan, is reportedly exploring a major revamp of the company’s approach to AI technology.
One potential change involves expanding Intel’s foundry business to manufacture semiconductors for AI leaders like NVIDIA.
The Intel foundry already produces chips for tech giants Microsoft and Amazon, but Tan aims to broaden the customer base.
This strategic shift could position Intel to better capitalize on the growing demand for AI chips.
Beyond hardware manufacturing, Intel is looking to expand in other technology areas. These include software development, robotics, and AI foundation models.
Industry analysts suggest that AI could add up to $4.4 trillion annually to the global economy in the coming years.
The competitive landscape remains challenging for Intel as it works to reestablish its position in the rapidly evolving semiconductor industry.
Intel currently has the backing of 83 hedge funds and 15 billionaire investors with holdings valued at approximately $953 million.
Market Position
The divestment strategy appears to be gaining traction with investors, as evidenced by the positive stock reaction to the Altera sale news.
By focusing on core operations and new growth opportunities in AI, Intel hopes to improve its financial performance and market standing.
The semiconductor market continues to be highly competitive, with companies racing to develop chips optimized for artificial intelligence applications.
Intel’s planned restructuring comes at a critical time as the company works to adapt to changing technology demands and market conditions.
Investors will be watching closely for the official announcement of the Altera sale, which would provide further clarity on Intel’s strategic direction.
