Intel's "self-rescue" new move: selling "future core" Altera shares for $17 billion

Despite the olive branches extended by chip industry peers such as Qualcomm and AMD, Intel is still trying to "rescue" itself. Recent news shows that selling part of its subsidiary Altera is part of Intel's considerations.

On Friday, October 18th, CNBC cited sources as saying that Intel is seeking to sell at least a minority stake in its subsidiary Altera to raise billions of dollars. This week, Intel has approached several private equity and strategic investors with proposals for Altera stock transactions, and has indicated to some investors that they may be allowed to acquire a majority stake in the business.

Sources also mentioned that the deal Intel is seeking is valued at around $17 billion. If the news is true, Intel's move can be considered not a loss-making one. Public records show that Intel acquired programmable logic device (PLD) manufacturer Altera for $16.7 billion in 2015, which falls under Intel's Programmable Solutions Group. In February of this year, Intel announced that Altera would become an independent subsidiary.

However, if Intel does sell a majority stake in Altera as reported, it could be a case of cutting off one's nose to spite one's face and a blow to Intel's top management. Just last month, Intel's CEO Pat Gelsinger stated that Intel's leadership sees Altera as a core part of Intel's future.

In September of this year, there were reports that Gelsinger and other Intel executives planned to present a plan to the board at a mid-month meeting, possibly to sell off some businesses, including the programmable chip business Altera, in order to cut costs. Subsequently, Altera's CEO Sandra denied that Intel intended to sell the company directly. She stated that the plan was not to sell Altera, but to sell a portion of the shares, a plan that had been communicated for a year, "What we are going to do is an IPO in 2026."

Previously, Intel also mentioned the possibility of commercializing Altera's business through an IPO, potentially listing as early as 2026. If we go by the CNBC news this Friday, allowing Altera to receive strategic or PE investments will significantly accelerate the commercialization process.

In any case, the news of selling Altera shares at a high price is the latest move in Intel's recent active self-rescue efforts.

At the end of August, Wall Street News mentioned that media reports indicated Intel was discussing various options, including splitting its product design and manufacturing business, and cutting factory investment projects. Morgan Stanley and Goldman Sachs, long-term partners of Intel, are providing comprehensive strategic advice, including potential mergers and acquisitions In September, Intel's board of directors held a three-day meeting to consider various strategic options, including cutting billions of dollars in factory projects, selling off some subsidiaries, including previously acquired Mobileye and Altera, and possibly spinning off its core business into independent companies.

CEO Gelsinger's plan includes restructuring Intel's foundry business IFS into an independent subsidiary, considering allowing it to obtain independent external financing; delaying the construction plans in Magdeburg, Germany and Poland by about two years, completing the construction plan in Malaysia, and the expansion in the United States remains unaffected; streamlining and simplifying the x86 product portfolio; by the end of this year, reducing or exiting two-thirds of global offices together; and selling part of the stake in Altera.

After CNBC's news on Friday, Intel's stock maintained the rebound momentum from Thursday, hitting an intraday high and rising 1.7% intraday, ultimately closing up nearly 1.5%. However, due to the overall decline in chip stocks following ASML's earnings report on Tuesday, Intel still fell more than 3% for the week.