TLDR
- Intel shares up 2.6% on report of potential Altera unit sale to Silver Lake
- Sale could be announced this week, valuing unit at around $9 billion
- Altera was acquired in 2015 for $17 billion, now worth less
- New CEO Lip-Bu Tan considering AI strategy overhaul and job cuts
- Intel foundry may expand to make chips for NVIDIA and other AI companies
Intel Corporation’s stock climbed 2.6% in pre-market trading on Monday following reports that the chipmaker is close to selling its Altera programmable chips division to private equity firm Silver Lake Management. This potential deal aligns with Intel’s ongoing restructuring efforts as it sheds non-core assets to focus on growth areas.
The sale announcement could come as early as this week, according to Bloomberg News.
Intel acquired Altera back in 2015 for approximately $17 billion. The unit specializes in programmable chips commonly used in telecommunications networks.
The current deal with Silver Lake might value the unit at significantly less than the original purchase price. Estimates suggest a valuation as low as $9 billion.
Several companies reportedly showed interest in acquiring Altera, including Lattice Semiconductor Corp and various buyout firms.
Strategic Restructuring
The potential Altera sale represents part of Intel’s broader strategy announced earlier in 2024 to divest non-essential assets. This move would allow Intel to redirect resources toward more profitable core operations.
Intel has already made progress in its restructuring efforts. The company recently received about $1.9 billion from the sale of its NAND memory technology and manufacturing business to South Korean tech giant SK hynix.
These divestments come as Intel faces changing market dynamics and increased competition in the semiconductor industry.
The company’s stock performance has been affected by recent market conditions. Broader market sentiment has been dampened by Trump administration tariffs on imported goods, particularly from China.
These tariffs have hit global stocks hard, including the “Magnificent Seven” tech companies heavily invested in AI.
AI Strategy Reboot
Under new CEO Lip-Bu Tan, Intel is reportedly considering a major revamp of its approach to artificial intelligence.
Tan is exploring changes to Intel’s manufacturing operations to produce semiconductors for AI giants like NVIDIA. This would expand upon Intel’s existing foundry business that already makes chips for other tech leaders such as Microsoft and Amazon.
The CEO’s plan includes targeting new customers for Intel’s foundry services. This pivot could help Intel better capitalize on the booming AI chip market.
Intel is also looking to expand in other tech growth areas beyond traditional chip manufacturing. These include software development, robotics, and AI foundation models.
However, the restructuring may come with difficult decisions. Reports suggest Tan is considering job cuts as part of the company’s transformation.
Intel’s position in the AI race reflects the high stakes in this sector. Market research suggests AI could add up to $4.4 trillion annually to the global economy in coming years.
The competitive landscape remains challenging. Intel currently has 83 hedge fund holders and 15 billionaire investors with holdings valued at approximately $953 million.
Any news on the Altera sale will be closely watched by investors as a signal of how aggressively Intel is moving to streamline operations and pivot toward growth areas in AI and advanced computing.
For Intel, the transformation couldn’t come at a more critical time as the company works to regain its footing in an increasingly competitive semiconductor market focused on AI capabilities.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
