Intel Completes Altera Divestiture, Targets Reduced Operating Expenses

Intel Finalizes Altera Divestiture as Part of Strategic Reorientation

Intel Corporation (INTC) has completed the sale of a majority stake in its field-programmable gate array (FPGA) designer subsidiary, Altera, for $3.3 billion. This divestiture, which closed on September 12, 2025, marks a significant step in Intel's ongoing efforts to streamline operations, reduce expenditures, and strategically reallocate capital towards its burgeoning foundry ambitions and core CPU businesses.

The Transaction in Detail

Intel divested a 51% controlling interest in Altera to an investment firm led by Silver Lake, with Abu Dhabi's MGX partnering in the acquisition. The transaction was valued at approximately $3.3 billion, reflecting debt financing and cash for the business. Intel will retain a 49% minority stake in Altera, which will be accounted for under the equity method. This divestiture is a notable shift from Intel's original acquisition of Altera in 2015 for $16.7 billion.

Prior to deconsolidation, Altera's results as an Intel segment in the first half of 2025 included $816 million in revenue, a 55% gross margin, and $356 million in operating expenses.

Analysis of Market Reaction and Financial Impact

Following the announcement, Intel's shares advanced, with INTC rising nearly four percent. This positive market response signals investor relief regarding the company's initiatives to address its strained balance sheet, which saw an $18.8 billion annual loss in 2024.

The sale directly contributes to a reduction in Intel's projected operating expenses. The company has revised its full-year 2025 non-GAAP operating expense target to $16.8 billion, down from a previously stated $17 billion. The 2026 full-year operating expense target remains unchanged at $16 billion. This immediate financial benefit underscores the strategic rationale behind shedding non-core assets.

Broader Context and Strategic Implications

This divestiture is a cornerstone of CEO Lip-Bu Tan's broader strategy to streamline Intel's operations and fund its ambitious foundry business. The company has undertaken a comprehensive cost-cutting drive, including significant workforce reductions, with plans to make its workforce a fifth smaller than the previous year. Additionally, Intel has outsourced its marketing operations to Accenture, leveraging artificial intelligence for efficiency, and ceased its automotive business unit in June 2025. Advertising expenditure has also been curtailed, decreasing from $1.2 billion in 2022 to $856 million in 2024.

The capital freed up by the Altera sale is crucial for Intel's foundry initiative, which aims to regain market share in PC and server CPUs and secure external customers for its advanced process nodes. The success of upcoming products like Panther Lake and Nova Lake (for PCs) and Diamond Rapids (for servers), all utilizing the Intel 18A process, is paramount to reclaiming ground from competitors like AMD.

Under new majority ownership, Altera is positioned to play a significant role in the expansion of artificial intelligence, with MGX's Chief Investment Officer for semiconductors, Omar Alismail, noting that it "provides a foundational platform for next-generation computing."

Looking Ahead

Intel's path forward hinges on several critical factors. The effective execution of its turnaround strategy, particularly in securing substantial external customers for its Intel 18A and subsequent 14A process nodes, will be key to the long-term success of its foundry business. The profitability of its 18A products will depend on yield rates and their competitive performance. The company must also adeptly manage workforce reductions while retaining and attracting the talent necessary to innovate and regain market leadership in its core CPU segments. The market will closely monitor upcoming economic reports, Intel's financial performance, and any further policy decisions, including the implications of the U.S. government's 10% equity stake, as the company navigates this complex strategic transformation. The sentiment remains "Uncertain to Slightly Positive," with sustained revenue growth and successful foundry operations being the ultimate catalysts for a decisively positive outlook.