Semiwiki on LinkedIn Semiwiki on Facebook Semiwiki on Twitter Register / Log in 
Array
(
    [content] => 
    [params] => Array
        (
            [0] => /forum/threads/intel-to-sell-majority-stake-in-altera-for-4-46-billion-to-fund-revival-effort.22583/
        )

    [addOns] => Array
        (
            [DL6/MLTP] => 13
            [Hampel/TimeZoneDebug] => 1000070
            [SV/ChangePostDate] => 2010200
            [SemiWiki/Newsletter] => 1000010
            [SemiWiki/WPMenu] => 1000010
            [SemiWiki/XPressExtend] => 1000010
            [ThemeHouse/XLink] => 1000970
            [ThemeHouse/XPress] => 1010570
            [XF] => 2021770
            [XFI] => 1050270
        )

    [wordpress] => /var/www/html
)

Intel to sell majority stake in Altera for $4.46 billion to fund revival effort

Daniel Nenni

Daniel Nenni

Admin
Staff member

3dbf863567dc4b505064d4871b2ab344

FILE PHOTO: Illustration shows Intel logo

(Reuters) -Intel has agreed to sell a 51% stake in its Altera programmable chip business to buyout firm Silver Lake for $4.46 billion, in the first major move under new CEO Lip-Bu Tan to revive the struggling American chipmaker.

(Silver Lake is close to Hock Tan, helping him form Avago and acquire Broadcom.) D.A.N.

The deal, announced on Monday, values Altera at $8.75 billion, a sharp decline from the nearly $17 billion Intel paid in 2015.

The sale will provide Intel with a cash boost as the once-leading chipmaker aggressively cuts costs after heavy investments to become a contract manufacturer under former top boss Pat Gelsinger strained finances.

Shedding assets, including Intel's stake in Altera, is at the center of Tan's strategy to streamline the chipmaker after several CEOs in the past failed to diversify beyond the company's mainstay PC and server chip business for years.

The leadership missteps have left Intel struggling to gain a footing in the AI industry dominated by Nvidia while rival AMD threatens its stronghold of the central processor market.

"Today's announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet," said CEO Tan, who took the helm after Gelsinger's ouster in December.

Since last year, Intel has taken steps to spin Altera out as a separate unit. Altera makes programmable chips that can be used for various purposes in industries ranging from telecom to the military.

The deal is expected to close in the second half of 2025, after which Intel expects to deconsolidate Altera's financial results from Intel's statements.

Raghib Hussain, who was an executive at custom AI chipmaker Marvell Technology, will succeed Sandra Rivera as Altera CEO from May 5. Altera generated revenue of $1.54 billion in 2024, a mere 3% of total sales, and posted an operating loss of $615 million.

After buying Altera in 2015, Intel had planned to move Altera's chip production into its own factories from rival TSMC which was at the time starting to gain a technological edge.

However, Altera lost market share to its top rival, Xilinx, which was acquired by AMD, as the transition to Intel's factories was long and costly.

(Altera also lost market share due to Intel mismanagement. It was impossible to work with them as a partner at that time.) D.A.N.

Reuters had first reported in November Silver Lake was among potential suitors competing for a stake in Altera.

https://www.yahoo.com/finance/news/intel-sell-51-stake-altera-123710414.html
 
Daniel Nenni said:
(Reuters) -Intel has agreed to sell a 51% stake in its Altera programmable chip business to buyout firm Silver Lake for $4.46 billion, in the first major move under new CEO Lip-Bu Tan to revive the struggling American chipmaker.

(Silver Lake is close to Hock Tan, helping him form Avago and acquire Broadcom.) D.A.N.

The deal, announced on Monday, values Altera at $8.75 billion, a sharp decline from the nearly $17 billion Intel paid in 2015.
Click to expand...

I can't believe Intel dumped Altera, their so-called golden goose, for a measly $8.75 billion after overpaying at $16.7 billion.

Talk about a genius-level fumble!
 
fansink said:
I can't believe Intel dumped Altera, their so-called golden goose, for a measly $8.75 billion after overpaying at $16.7 billion.

Talk about a genius-level fumble!
Click to expand...

Not to mention the billions of dollars invested/lost in Altera over the last ten years.

I do like the CEO switch. Raghib Hussain is the real deal, Sandra Rivera (Career Intel), not so much.
 
I note the deal is for 51% so Intel can spin this to say they haven't crashed completely on this.
But certainly a good point about all the money they pumped in since the purchase.
 
Daniel Nenni said:
Not to mention the billions of dollars invested/lost in Altera over the last ten years.

I do like the CEO switch. Raghib Hussain is the real deal, Sandra Rivera (Career Intel), not so much.
Click to expand...

Intel’s loss from Altera could be $8.5 billion to $9.5 billion in 2025 dollars, factoring:

$4.5B inflation-adjusted transaction loss ($21.6B cost vs. $17.1B valuation).

$4-5B estimated goodwill/intangible-impairments/write-downs (unconfirmed but likely).

Negligible or negative net operating contribution (recent losses offset earlier profits).

Bet they’ll call it “strategic realignment”, “restructuring” or “portfolio simplification”.
 
View Raghib Hussain’s graphic link

Raghib HussainRaghib Hussain President at Marvell TechnologyPresident at Marvell Technology • 21 minutes ago

Dear Colleagues, Partners, Customers, and Industry Friends,

I am humbled and honored to share that I will be joining Altera as new CEO, after an incredible 25-year journey at Cavium/Marvell. With tremendous gratitude for the past, I am excited about the opportunities that the future hold. I also have the deepest appreciation for relationships, trust and what we have achieved collectively.

Co-founding Cavium with Syed Ali in 2000, marked the start of an extraordinary adventure. We built Cavium from scratch to about a $1B annual revenue company, and over $6B market cap at it’s exit. Our innovations in networking, security, and compute solutions positioned Cavium as an industry leader. Our successful IPO in 2007 and the continued growth that followed were a testament to the dedication of our exceptional team and the trust of our valued customers. That journey culminated with Cavium’s acquisition by Marvell in 2018.

Joining Marvell post-acquisition, I had the privilege of partnering with Marvell CEO, Matt Murphy, and the team. Together, we strategically pivoted Marvell towards data infrastructure, transforming and establishing it as a leading semiconductor provider for the AI data infrastructure. Our commitment to innovation and excellence placed Marvell at the forefront of the industry, and I am immensely proud of the strides we’ve made together.

As I step into this exciting new chapter as CEO of Altera, I carry with me the invaluable experiences, lessons and relationships cultivated throughout my career to drive innovation and solve customer problems.

My sincere gratitude to my colleagues, partners, customers, friends and family—thank you. Your unwavering support, collaboration, and trust throughout these remarkable 25 years have meant the world to me. Your contributions have been integral to our shared success. I am deeply grateful for all we have shared and accomplished together so far, and I look forward to exploring new opportunities for the collaboration in the future.
 
Seems a sensible move.

To put the Intel investment in Altera in some context, if I read correctly the Dow Jones semis index increased about 10X between 2015-25. Intel halved the value of Altera (and arguably could have shifted it for a lot more pre Trump 2.0 if they'd moved faster). Intel's timing on these things has rarely been great. Before we even consider the return on capital invested (if any). Or how you (apparently) post a >$500m operating loss on revenues of around $1600m running an FPGA business.

But that's all in the past. If Altera gets back on track, the remaining 49% stake could well be worth having.
 
tooLongInEDA said:
Seems a sensible move.

To put the Intel investment in Altera in some context, if I read correctly the Dow Jones semis index increased about 10X between 2015-25. Intel halved the value of Altera (and arguably could have shifted it for a lot more pre Trump 2.0 if they'd moved faster). Intel's timing on these things has rarely been great. Before we even consider the return on capital invested (if any). Or how you (apparently) post a >$500m operating loss on revenues of around $1600m running an FPGA business.

But that's all in the past. If Altera gets back on track, the remaining 49% stake could well be worth having.
Click to expand...
It's not an operating loss of $500M in the sense that those losses weren't associated with the revenue that was recorded. But it is an economic loss in that Altera's assets were not worth what Intel recorded them as.

The FPGA business is just now starting to recover. Intel probably could get a better price 1-2 years from now. Intel, however, views Altera as an operational distraction, has done a terrible job with it, and perhaps wants more of a cash cushion. Better to operationally divest it now, get some liquidity, move on, and sell the rest of it later if Silver Lake can turn it around.

Or maybe they would buy back Silver Lake's stake and repeat this cycle!
 
You must log in or register to reply here.
Back
Top