Intel Officially Announces Sale of Programmable Chip Business Altera to Key Broadcom Investor

Intel, which is in deep trouble, has finally finalised the sale of its programmable chip business, Altera.

Update: Intel announced the deal at 8:30 PM Beijing time. Silver Lake Capital will acquire a 51% stake in Altera at a valuation of $8.75 billion. The company also announced that Raghib Hussain, President of Products and Technology at Marvell Technology, will take over as CEO of Altera starting next month.

Intel also stated that this move will accelerate Altera's independent development and advance Intel's strategy of focusing on core businesses and strengthening financial strength.

This is also seen as an action by the new CEO, Liwu Chen, to begin divesting non-core assets . Affected by this news, Intel's pre-market surge exceeded 4%. Due to the repeated acquisition rumors and the news of a "joint chip factory" with TSMC, Intel's stock price has been highly volatile recently.

Due to strategic missteps by previous CEOs, Intel missed the opportunity to enter the AI accelerator market, while its core business market share has been continuously eroded by competitors. Former CEO Pat Gelsinger was dismissed by the board last year due to slow progress in the revival plan. Two weeks ago, in his first strategic speech after taking office, Liwu Chen stated that Intel under his leadership will divest non-core assets, but did not specify which businesses are considered "non-core".

On the other hand, negotiations for the sale of Altera have been ongoing for the past few months.

Intel spent $16.7 billion to acquire Altera in 2015 , with the idea of expanding beyond PC chips. Altera produces programmable chips (FPGA) and application-specific integrated circuits (ASIC), which are widely used in mobile communication base stations, military, and various industrial applications. In the AI era, more and more tech giants are starting to customize chips according to their needs.

Insiders revealed that earlier this year, after the two companies entered exclusive negotiations, Intel determined that the improvement plan proposed by Silver Lake for Altera was feasible and could enhance the value of the chip company.

Leading this acquisition on Silver Lake's side is Chairman and Managing Partner Kenneth Hao. Similar to Liwu Chen, Kenneth Hao is also a renowned semiconductor industry investment tycoon. Broadcom, which made a splash in the capital market last year, is closely related to him .

In a series of divestitures by HP more than 20 years ago, Silver Lake partnered with KKR to buy the chip business Avago for $2.65 billion and brought in Hock Tan as CEO. In a series of subsequent capital market operations, Avago not only quickly completed its IPO but also rapidly completed two "snake swallowing elephant" deals, acquiring LSI Logic and Broadcom, and even attempted to acquire Qualcomm later. Undoubtedly, behind Broadcom's series of bold moves in the capital market, Kenneth Hao's strategic planning played a crucial role.