Intel could be preparing to offload a portion of its stake in Altera, its FPGA business, as it looks for ways to shore up its financial position. Faced with steep competition in the AI and chip sectors, the company is reportedly exploring options to sell a minority share of Altera. According to those in the know, Altera might now be worth around $17 billion—just above the $16.7 billion Intel paid for it back in 2015.
A Shift in Intel’s Approach to Altera
If Intel follows through, it would be a noticeable shift from its previous stance on the programmable solutions unit. Intel initially saw Altera as a key asset within its Programmable Solutions Group (PSG), even planning for an IPO in 2026. But with growing financial pressure, liquidating part of Altera appears to be the faster route to get cash into Intel’s hands.
Altera, known for its field-programmable gate arrays (FPGAs), produces adaptable chips that can be used in various industries, from telecom to defense. Intel saw FPGAs as an integral part of its future, especially with market forecasts putting the FPGA sector at a $55 billion potential.
Competitive Pressure and Financial Troubles
Intel’s struggles aren’t limited to just restructuring. The company has been losing ground in crucial markets. Nvidia is currently dominating AI chips, while AMD has been chipping away at Intel’s hold on PC processors. To make matters worse, Arm Holdings recently made an offer to buy one of Intel’s divisions, although the deal didn’t materialize.
Qualcomm is also watching from the sidelines but has held off on making any official move until political uncertainties around the U.S. election clear up. Should a sale happen, it could reshape Intel’s direction as it fights to keep its footing in a fast-evolving market. Intel’s stock continues to struggle and in August, author Daniel Jiang broke down the issues the company’s faces.
Why has Intel’s stock plummeted so dramatically? Today’s financial report might be the final blow. The company’s earnings missed expectations, and the forecast is bleak; they may even skip dividends next quarter. One key issue is the past year’s GPU boom, from which Intel gained… pic.twitter.com/wv6mSFPrwD
— Daniel Jiang (@DanielHJiang) August 3, 2024
While Intel is mulling over potential divestitures, Qualcomm has been eyeing Intel as a potential takeover target. However, Qualcomm is holding off on any concrete plans until after the upcoming U.S. elections. Political and regulatory factors are at the forefront of Qualcomm’s considerations, with the Biden administration tightening antitrust guidelines that could stifle a major acquisition like this.
Meanwhile, the election outcome could significantly impact whether large tech deals are possible in the near future, making Qualcomm cautious about any premature moves.Under the 2022 Chips and Science Act, Intel stands to get up to $8.5 billion to help ramp up manufacturing stateside. Given how closely Intel is tied to the US’s plans to cut reliance on foreign chips, this acquisition could draw even more scrutiny.
Intel’s Internal Reorganization
Internally, Intel has been undergoing some major changes of its own. Pat Gelsinger, who took over as CEO, has been steering the company through a massive overhaul. One of the big changes was the creation of Intel Foundry, which was spun off as a separate entity. Intel’s move was aimed at bringing in outside investors to prop up Intel’s finances.
The decision to split off Intel Foundry reflects the company’s broader strategy to simplify its operations and tackle its financial challenges head-on. Despite its stock value falling sharply over the past year, Intel is pressing ahead with plans to revitalize its core business while keeping investors on board.
Last Updated on November 7, 2024 2:28 pm CET