Intel to Sell Altera Stake at $17B Valuation

Intel has reportedly begun preparations to spin off its FPGA business, Altera, as an independent company, according to sources cited by Reuters. Initial steps for the sale of a minority stake in Altera have been underway in recent weeks. Potential investors, including Silver Lake and Bain Capital, are said to be exploring offers for a minority stake in Altera. Additionally, private equity firm Francisco Partners has expressed interest in acquiring part of Altera's shares. However, discussions are still in early stages, and Intel is expected to start accepting offers from potential buyers in the coming weeks.

Intel reportedly aims to value Altera similarly to its acquisition price of $17 billion in 2015. Although the exact percentage of shares Intel plans to sell remains unclear, the transaction is anticipated to be valued in the billions of dollars.

Intel acquired Altera for $16.7 billion in 2015 and has since managed it as the Programmable Solutions Group (PSG). On October 3, 2023, Intel announced its plan to separate PSG from its Data Center and Artificial Intelligence (DCAI) Group to establish it as an independent operating entity, aiming for an IPO within two to three years. This plan was further solidified when, on February 29, 2024, Intel officially rebranded the newly independent FPGA division under its original name, Altera.

In a recent interview, Altera CEO Sandra Rivera confirmed that Intel's strategy to facilitate Altera’s IPO by 2026, alongside selling a portion of its ownership, remains unchanged. Rivera noted that despite Altera’s operational independence since early 2024, certain business ties with Intel still exist. The separation process has been progressing ahead of schedule, with full independence expected to be achieved by January 1, 2025.

Rivera highlighted that Altera's renewed independence will allow the company to focus comprehensively on its FPGA offerings, from cloud solutions to edge applications, with the goal of becoming the leader in the FPGA industry. Achieving an IPO is seen as a significant milestone in this endeavor.

She also pointed out that, while Altera's main competitor, Xilinx, was acquired by AMD, other FPGA companies tend to concentrate on lower-tier or specialized markets. This market landscape presents Altera with substantial opportunities, provided it can deliver a diverse range of solutions to its customers. Currently, over 80% of Altera’s sales and more than 50% of its demand are met through channel partnerships, and the company is working to expand its reach into new markets.