Intel Offloads Altera Majority Stake At Steep Discount

the deal values Altera at around 50% of what Intel paid for the company a decade ago

Intel yesterday announced that it was selling a 51% stake of its Altera business to Silver Lake, details here:

SANTA CLARA, Calif. & SAN JOSE, Calif. & MENLO PARK, Calif.--(BUSINESS WIRE)-- Intel Corporation today announced that it has entered into a definitive agreement to sell 51% of its Altera business to Silver Lake, a global leader in technology investing.

The transaction, which values Altera at $8.75 billion, establishes Altera’s operational independence and makes it the largest pure-play FPGA (field programmable gate array) semiconductor solutions company.

The deal marked an important milestone in a journey which began almost a decade ago when Intel acquired Altera for $16.7 billion, details here.

Intel and Altera announced on June 1, 2015, that they had entered into a definitive agreement under which Intel would acquire Altera for $54 per share in an all-cash transaction valued at approximately $16.7 billion. The transaction closed December 28, 2015. The acquisition will couple Intel’s leading-edge products and manufacturing process with Altera’s leading field-programmable gate array (FPGA) technology.

The combination is expected to enable new classes of products that meet customer needs in the data center and Internet of Things (IoT) market segments. Intel plans to offer Altera’s FPGA products with Intel Xeon® processors as highly customized, integrated products. The companies also expect to enhance Altera’s products through design and manufacturing improvements resulting from Intel’s integrated device manufacturing model.

Thus, a decade after paying $16.7 billion for Altera, Intel is now selling a 51% stake in the company at a valuation close to half of what it originally paid to acquire it in the first place. Furthermore, the timing couldn’t be worse. Altera saw its revenues fall by almost 50% in 2024:

Altera revenue was $1.5 billion, down $1.3 billion from 2023 as customers tempered purchases to reduce existing inventories across all product lines.

It’s not just Altera that’s been struggling. Lattice Semiconductor has seen its share price fall by almost 50% over the course of the past year, of course exacerbated by recent events emanating from the US administration.

The point here is that you really couldn’t have chosen a worse time to ink this deal. The fact that Intel chose to go ahead regardless is a testament to how desperately the company needs the cash. In any case, the deal comes with bad news for Altera CEO Sandra Rivera: she’s no longer the CEO

Intel also announced that Raghib Hussain will succeed Sandra Rivera as chief executive officer of Altera, effective May 5, 2025. Hussain is a highly accomplished and visionary technology executive with strong business acumen and engineering credentials. He joins Altera from his previous role as president of Products and Technologies at Marvell. Prior to joining Marvell in 2018, Hussain served as chief operating officer of Cavium, a company he co-founded. Prior to Cavium, Hussain held engineering roles at both Cisco and Cadence and helped found VPNet, an enterprise security company.

While the focus is now rightly on the terms of the deal, there’s a fascinating history involving the trifecta of Intel, Altera and TSMC. It dates back to an era when Intel made its first foray into the foundry world and staged a coup over TSMC with Altera at its very center. Let’s dig in…