• Intel is in advanced talks to sell a majority stake in Altera to Silver Lake, aiming to streamline operations and fund new chip plants.
• The deal could value Altera at around $9 billion, significantly below Intel’s $16.7 billion acquisition price in 2015.
• Intel’s divestment reflects its shift away from non-core assets, while private equity interest in semiconductors continues to grow.
Intel is reportedly in exclusive negotiations with private equity firm Silver Lake for the sale of a majority stake in its FPGA unit, Altera. Speculation surrounding the potential divestiture has also attracted interest from other prospective buyers, including Francisco Partners, Apollo Global Management, Bain Capital, and Lattice Semiconductor, which is also competing for the acquisition.
Silver Lake appears to be the leading candidate, as it finalizes investment details for Altera, a company known for producing versatile chips primarily used in telecom networks. While discussions are reportedly advanced, the specific size of the stake being negotiated remains uncertain, and there is a possibility of delays or negotiations falling through.
Intel and Silver Lake have not commented on the negotiations. Intel acquired Altera in 2015 for approximately $16.7b and has been looking to divest a stake in the unit as part of a turnaround strategy since late 2024. Previous reports indicated that Intel aimed to sell at least a minority stake, which could yield several billion dollars for the company.
However, some bidders are reportedly valuing Altera at around $9b, significantly lower than its acquisition price. Before Intel's purchase, Altera was the second-largest FPGA manufacturer by sales, with its main competitor, Xilinx, being acquired by AMD in 2022 for $35b.
Field-Programmable Gate Arrays (FPGAs) are integrated circuits that can be configured by designers post-manufacturing to perform specific logic functions. This adaptability allows for rapid prototyping and iterative development without the need for custom hardware fabrication.
FPGA sector present an attractive investment opportunity due to several factors:
• Market Growth: The FPGA market is projected to grow from $12.1 billion in 2024 to $25.8 billion by 2029, at a CAGR of 16.4%.
• Technological Advancements: Emerging technologies such as 5G networks, artificial intelligence, and the Internet of Things demand high-speed, low-latency processing, which FPGAs are well-suited to provide.
• Industry Adoption: Sectors like telecommunications, automotive, aerospace, and defense increasingly rely on FPGAs for their flexibility and performance, driving further demand.
The semiconductor industry has recently attracted a number of PE investments, including:
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