Intel to dump majority stake in Altera—Silver Lake to take control in $8.75bn deal to fuel AI chip race

Why is Intel divesting control of Altera now?

Intel Corporation has announced the sale of a 51% stake in its Altera business to private equity firm Silver Lake in a deal that values Altera at $8.75 billion. The transaction, expected to close in the second half of 2025, will grant operational independence to Altera, establishing it as the world’s largest pure-play FPGA (field-programmable gate array) company. Intel will retain the remaining 49% equity, preserving financial upside while distancing itself from day-to-day management.

The move is part of Intel’s broader effort to restructure its portfolio by shedding non-core business lines and doubling down on its central focus: x86 CPU development, data center infrastructure, and U.S.-based foundry services. Altera, which Intel acquired for $16.7 billion in 2015, has seen inconsistent performance under Intel’s stewardship and struggled to fully capitalize on synergies expected from the acquisition.

CEO Lip-Bu Tan said the divestiture underlines Intel’s commitment to sharpening its focus, lowering its expense base, and improving its balance sheet. While the company steps back from directly operating the FPGA unit, it remains financially tethered to Altera’s future through its minority stake.

How does this reshape Altera’s business outlook?

Operational independence under a new ownership structure is expected to significantly reshape Altera’s business strategy. With Silver Lake providing strategic capital and focus, and Raghib Hussain set to take the reins as CEO on May 5, 2025, the FPGA specialist is poised to target high-growth segments such as artificial intelligence, edge computing, robotics, and aerospace-grade programmable logic.

Raghib Hussain, a co-founder of Cavium and most recently President of Products and Technologies at Marvell Technology, brings a track record of scaling silicon solutions in both enterprise and infrastructure markets. He replaces Sandra Rivera, who played a pivotal role in Altera’s product repositioning within Intel.

Silver Lake’s chairman and managing partner Kenneth Hao described the transaction as a “once-in-a-generation” opportunity to back a semiconductor leader in advanced compute. The firm intends to support Altera’s growth across data center accelerators, AI inference engines, and embedded industrial systems—sectors increasingly reliant on programmable logic over fixed-function chips.

What is the financial state of Altera prior to this spin-out?

In fiscal year 2024, Altera generated $1.54 billion in revenue, with a GAAP gross margin of $361 million but an operating loss of $615 million. On a non-GAAP basis, the gross margin stood at $769 million with a modest operating income of $35 million. These figures highlight both the potential and the operational drag the unit placed on Intel’s consolidated financials.

Once the transaction closes, Intel expects to deconsolidate Altera’s performance from its financial statements, enabling better visibility into its core segments and eliminating a key source of operating loss. This shift supports Intel’s ongoing turnaround strategy amid intensifying competition from AMD, NVIDIA, and Arm-based processor vendors.

How does this deal affect Intel’s share price and investor sentiment?

Intel’s stock (NASDAQ: INTC) responded positively to the news. On April 14, 2025, shares climbed to $20.31 from a recent low of $17.66, signaling renewed investor confidence in management’s ability to realign the company’s strategic priorities. The 15% gain over a two-week period suggests the market is optimistic about Intel’s attempt to offload underperforming assets and concentrate capital in high-margin, high-volume core businesses.

Analysts from UBS and Stifel have both maintained “Neutral” ratings on Intel stock, with price targets of $22 and $21 respectively. While not overly bullish, their positions acknowledge the importance of the Altera deal in helping Intel clean up its income statement and rebalance toward faster-growing segments.

Market observers also note that the partial exit from the FPGA market doesn’t mean Intel is abandoning innovation in that area. Instead, the company retains influence through its 49% stake, while also deepening its engagement with third-party clients via its expanding foundry services division—recently revitalized as Intel Foundry.

What does this mean for the programmable semiconductor sector?

Altera’s reemergence as an independent entity could reshape the competitive landscape in programmable semiconductors. FPGAs are increasingly vital in the AI era, serving as reconfigurable accelerators in low-latency and power-sensitive applications. As edge AI, 5G infrastructure, and industrial robotics gain adoption, Altera’s programmable architecture offers significant flexibility that fixed-function silicon cannot.

Its renewed independence may position it to compete more aggressively with AMD’s Xilinx, the only other major player in the FPGA space following AMD’s $49 billion acquisition of Xilinx in 2022. Market dynamics suggest demand for FPGAs will continue to surge across automotive systems, AI model inference, and military-grade signal processing—sectors in which Altera has legacy strength.

Altera’s 40-year track record in the FPGA industry, its advanced toolchain, and its engineering depth make it a formidable player. With Silver Lake’s support and a focused go-to-market approach, the company is well-positioned to reassert its dominance.

How does this align with wider semiconductor industry trends?

Intel’s decision mirrors a broader trend among chipmakers to focus on specialization and financial discipline. With global semiconductor capital expenditure forecast to surpass $200 billion by 2026, leading firms are under pressure to reduce inefficiencies, increase ROI, and navigate geopolitical headwinds in supply chain localization and chip sovereignty.

The transaction also fits within the wider restructuring of Intel under CEO Pat Gelsinger‘s mandate. Since his return, Intel has pushed forward with its IDM 2.0 strategy—an effort to combine in-house manufacturing with foundry services while aggressively cutting costs in non-performing divisions. Intel has also recently spun out Mobileye via IPO and is seeking strategic alternatives for other subsidiaries.

For Altera, operating independently offers the chance to move nimbly, raise capital, and target niche FPGA innovations without navigating Intel’s broader organizational complexity. At the same time, Intel benefits from unlocking value, improving transparency in reporting, and freeing capital for reinvestment into areas like EUV lithography and advanced packaging.

What are the long-term implications for investors and the semiconductor ecosystem?

In the long run, Intel’s partial exit from Altera is expected to serve both companies well. For Intel, the simplification of its corporate structure and narrowing of its focus may enable it to catch up to rivals in advanced nodes and deliver on its roadmap for AI-era processors.

For Altera, backed by a private equity firm with deep expertise in tech scaling and a CEO with strong entrepreneurial and product credentials, the path forward is focused and independent. If it succeeds in reclaiming FPGA leadership, Intel benefits indirectly through its residual stake, and the industry gains another competitive innovator in programmable compute.

As technology becomes increasingly AI-centric and domain-specific architectures dominate, programmable solutions like FPGAs will become integral to everything from edge sensors to supercomputers. The Silver Lake-Altera partnership may thus prove pivotal in defining the next generation of adaptable, power-efficient AI hardware.