Intel Corporation has announced a definitive agreement to sell a 51% stake in its Altera business to Silver Lake, a global technology investment firm, for $8.75 billion. This move aims to establish Altera as an operationally independent entity and the largest pure-play FPGA (field-programmable gate array) semiconductor solutions company. The transaction is expected to close in the second half of 2025, subject to customary closing conditions.

Strategic Rationale for the Deal

Intel's decision to sell a majority stake in Altera aligns with its broader strategy to sharpen its focus on its core business, reduce its expense structure, and strengthen its balance sheet. By retaining a 49% minority stake, Intel can still participate in Altera's future success while concentrating on its key objectives. For Silver Lake, this investment represents a unique opportunity to invest in a leader of scale in advanced semiconductors, particularly in the high-growth markets of AI, edge computing, and robotics.

Altera's Independence and Leadership

The transaction is structured to provide Altera with greater independence and agility, enabling it to accelerate its roadmap and capitalize on emerging opportunities. As a standalone company, Altera will have the flexibility to make independent decisions and investments, fostering innovation and growth. With Silver Lake's backing, Altera is well-positioned to strengthen its technology leadership and expand its presence in key markets.

Leadership Transition

In conjunction with the sale, Intel has announced that Raghib Hussain will succeed Sandra Rivera as the CEO of Altera, effective May 5, 2025. Hussain brings a wealth of experience to the role, having previously served as President of Products and Technologies at Marvell. His background includes co-founding cybersecurity company VPNet and Cavium, where he served as COO, as well as holding engineering positions at Cisco and Cadence. Intel CEO Lip-Bu Tan expressed gratitude for Rivera's contributions and welcomed Hussain, citing his extensive industry experience and proven track record of success.

Financial Implications

In fiscal year 2024, Altera generated revenues of $1.54 billion, a GAAP gross margin of $361 million, and a GAAP operating loss of $615 million. However, on a non-GAAP basis, Altera's gross margin was $769 million, and its operating income was $35 million. Following the completion of the transaction, Intel expects to deconsolidate Altera's financial results from its consolidated financial statements.

Historical Context

Intel acquired Altera in 2015 for approximately $16.7 billion, integrating it into its data center unit under the Programmable Solutions Group (PSG) brand. In 2024, Intel announced plans to relaunch Altera as a standalone FPGA business, formally declaring its independence in January 2025. This recent agreement with Silver Lake marks the next chapter in Altera's evolution, positioning it as a leading independent player in the FPGA market.

Analyst Perspective

Industry analysts view the sale as a positive outcome for both Intel and Altera. For Intel, it provides an infusion of capital to support its strategic priorities while retaining a significant stake in a promising business. For Altera, it offers the opportunity to operate with greater autonomy and focus, potentially unlocking significant value in the long term. The partnership with Silver Lake, a firm with a strong track record of creating value in technology companies, is expected to accelerate Altera's growth and innovation.