Intel Corp. is weighing a potential sale of a minority stake in its Altera unit, seeking to raise billions of dollars in cash amid mounting financial pressures, according to a report.
This move comes in response to a significant decline in Intel's stock price, which has plummeted 50% this year, along with a loss of market share in the competitive semiconductor industry. To address these challenges, Intel is courting private equity and strategic investors, including rival Qualcomm.
According to a CNBC report, citing people familiar with the matter, Intel is targeting a valuation of $17 billion for Altera, a slight increase from the $16.7 billion it paid for the company nine years ago, CNBC reported.
The company's engagement with potential investors marks a seismic shift, especially following CEO Pat Gelsinger's recent affirmation of Altera's importance to Intel's strategic future.
Intel's reported bid for sale of a stake in its Altera business coincides with broader market challenges and rising geopolitical tensions, particularly concerning China.
Despite receiving significant funding from the CHIPS Act, Intel's struggles are made worse by manufacturing delays and difficulties in keeping pace with advancements in artificial intelligence, leading to a 55% drop in its stock price this year.
With an IPO scheduled for 2026, Intel is speeding its preparations to monetize its Altera business and is considering strategic or private equity investment. By taking this action, the company hopes to strengthen its semiconductor manufacturing goals and unlock value from Altera. By selling a portion of Altera, Intel hopes to reassure investors about its capacity to function independently and free up resources for its core business, CNBC reported.
Last month, it was reported that Apollo Global Management, a U.S.-based asset management company, is planning to invest $5 billion in the chipmaker, which was once touted as the most valuable in the world.
Also, Intel's Foundry business recently signed a billion-dollar deal with Amazon to make custom chips for the e-commerce giant and revealed plans to split Intel Foundry as an independent subsidiary within the firm.
The deal will expand Intel's strategic collaboration with Amazon Web Services (AWS). Under the deal, Intel Foundry—the contract manufacturing arm of Intel -- will produce an artificial intelligence (AI) fabric chip for AWS on the Intel 18A process.
Intel will also produce a custom Xeon 6 chip on Intel 3 that builds on an existing partnership, under which Intel produces Xeon Scalable processors for AWS.
