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Intel has agreed to sell a 51 percent stake in its Altera programmable chip business to buyout firm Silver Lake Management, in the first major move by new Intel chief executive Lip-Bu Tan to make good on a promise to sell off non-core assets.
The transaction values Altera at $8.75 billion (£6.6bn), around half the $16.7bn Intel paid for the company in 2015.
The deal is expected to close in the second half of this year.
New management
Altera chief executive Sandra Rivera is to be succeeded as of 5 May by Raghib Hussain, who will join the company from Marvell Technology, where he is president of products and technologies.
“Today’s announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet,” said Tan in a statement.
Silver Lake chairman and managing partner Kenneth Hao said Altera would focus on investing in AI-driven markets such as edge computing and robotics.
The company’s programmable chips, which can be adapted for a range of purposes, are currently mainly used in telecommunications networks.
Altera generated $1.54bn of revenue last year, and posted an operating loss of $615m.
Intel is to receive about $3.4bn in cash from the deal, Bloomberg reported, giving it a needed cash infusion as Tan seeks to turn the company.
Streamlined business
Former chief executive Pat Gelsinger invested heavily in building up a foundry business for third-party clients, in competition with Taiwan’s TSMC, but the business has yet to take off.
Gelsinger was forced out of Intel in December.
Tan said at a recent Intel event that he would seek to sell off assets that aren’t critical to the company’s mission as part of a broader turnaround plan.
The new chief executive, who took over last month, is considering thinning Intel’s middle management and changing its manufacturing practices to improve usability and performance, Reuters reported at the time.
Tan said he wants to better align Intel with customers.
