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This multi-billion-dollar bid on Intel’s Altera aims to secure cash amid struggles

Intel reportedly is considering private equity firms for selling Altera, its multibillion-dollar programmable chip business, and has shortlisted private equity firms Silver Lake, and Bain Capital, besides Francisco Partners. Intel is exploring a sale price close to the one it paid when purchasing Altera in 2015, though there are no clear indications regarding how big the stake being sold is.

According to a couple of sources who asked for anonymity because the deal remains confidential, any final transaction would reportedly go for several billion dollars. Altera, a San Jose company acquired by Intel for $16.7 billion in 2015, specialises in programmable chips that can be dynamically reprogrammed for processing online videos and supporting military and telecommunications equipment.

Intel's CEO, Pat Gelsinger, last week revealed plans to sell a stake in Altera to go public, stating: “We remain focused on selling a stake in Altera on a path to its IPO in the coming years. To that end, we have begun discussions with potential investors and expect to conclude in early 2025.”

The sale of a part of its Altera unit is part of efforts by Intel to streamline operations, cut costs, and also generate more cash as it grapples through a hard financial environment. The chipmaker has recently reported good revenue forecasts but still falls behind in missed opportunities in the booming AI chip sector. Its stock remains down more than 50% so far this year. This deal is going to give a much-needed financial boost for Intel. Analysts noted that the company is now mulling several measures that cut overall expenses.

Intel's acquisition of Altera in 2015 appeared to be more of a strategic move. Things, however, became complicated when Intel shifted Altera's chip manufacturing from TSMC to its own, which looked costly and time-consuming. The shift in manufacturing led Altera to lose of market share to Xilinx, which AMD later used to acquire, leaving the entire challenge in the programmable chip market before Intel.

Intel hasn't confirmed any details except for Gelsinger's statements, and representatives from Silver Lake and Bain declined to comment. Francisco Partners did not return requests for comment. Still, with Intel looking to close a deal in early 2025, these talks with potential investors might prove crucial for Intel's future strategy. As the company moves further on its road to stabilizing its financial base, this will be a very cash-intensive one for Intel to help in its competitive turnaround in the semiconductor industry.