Intel won’t sell off its programmable chip business: Altera CEO

Intel’s plan to spin off its Altera programmable chip business and pursue an initial public offering (IPO) by 2026 remains unchanged, despite recent speculation about the company potentially selling the unit outright.

Sandra Rivera, CEO of Altera, reaffirmed the company’s commitment to the IPO during an interview with CRN, addressing rumors reported by Reuters.

“There’s so much […] that gets written that is not true and not sourced from anyone that actually knows what’s happening,” Rivera said, clarifying that Intel remains committed to the plan it outlined over a year ago.

Rivera emphasized that Intel has always planned to sell a stake in Altera rather than fully divesting from it, to take the company public by 2026.

Intel’s decision to spin off Altera and take it public could reshape the competitive dynamics of the FPGA market, according to analysts.

“Intel’s decision to spin off Altera and take it public has the potential to significantly impact the competitive landscape for FPGAs,” said Arjun Chauhan, an analyst at Everest Group. “AMD’s acquisition of Xilinx already positions it as a formidable player in this space, and a more independent Altera could enhance its ability to compete by focusing more closely on innovation and emerging use cases, particularly in artificial intelligence (AI), data centers, and cloud computing.”

Competitive impact on the FPGA market

Altera — which designs field-programmable gate arrays (FPGAs), allowing chips to be reprogrammed for diverse applications — has been operating independently of Intel since early 2024. However, the company is still decoupling from Intel’s administrative functions, a process expected to be completed by January 2025. According to Rivera, Altera is “ahead of schedule” in this transition, the CRN report added.

Intel acquired Altera for $16.7 billion in 2015, integrating the FPGA business into its operations under the name Programmable Solutions Group. In 2023, Intel announced plans to spin off the unit as a standalone company to attract private investment and support Intel’s broader financial strategy under CEO Pat Gelsinger. In early 2024, Altera was spun off from Intel as a separate business.

Rivera noted that Altera is well-positioned in the FPGA market, particularly after the acquisition of competitor Xilinx by AMD in 2022. In an earlier press briefing, Rivera had said that Altera aims to capitalize on a $55 billion FPGA market opportunity, spanning sectors like cloud, data centers, automotive, and aerospace.

The ultimate goal, according to Rivera, is to make Altera a leading player in the FPGA industry, with the IPO being a critical milestone in that journey.

This move will intensify competition between Altera and AMD’s Xilinx, especially as demand for programmable chips increases across sectors, Chauhan said. “This move could heighten competition between Altera and Xilinx, especially as the demand for programmable chips continues to grow. While AMD/Xilinx currently has an advantage, the spinoff could allow Altera to attract strategic investments and partnerships that would help it close the gap.”

Despite these potential opportunities, Intel’s decision to sell a stake in Altera is also a strategic move to unlock liquidity, which can be reinvested in areas critical to its future growth, such as advanced process technology and AI.

“Intel’s decision to sell a stake in Altera signals a strategic shift aimed at unlocking liquidity, which could be reinvested into its core growth areas, such as advanced process technology, AI chips, and its IDM 2.0 strategy,” Chauhan said.

The risk, however, lies in how Altera’s independence could create overlap with Intel’s core businesses. “There’s a slight risk that this new competitive dynamic could lead to some overlap with Intel’s core businesses, especially if Altera establishes itself as a strong independent entity – but this risk could be mitigated if both entities coordinate their product roadmaps,” Chauhan observed.

Reports about Intel’s divestment plans

Citing undisclosed sources familiar with the situation, Reuters had earlier reported that Intel CEO Pat Gelsinger, along with top executives, is expected to present a strategic plan to the board of directors later this month, aimed at cutting non-essential businesses and revising capital expenditures.

The proposal reportedly included selling off units, such as the programmable chip division Altera, as part of broader efforts to reduce costs and refocus resources amid declining profits at the once-dominant chipmaker.

The chip giant is going through its worst phase currently and it may look at alternatives to improve its financials. In its latest quarterly results, the company reported an 85% year-on-year drop in its profit and also announced a slashing of 15,000 jobs as it grapples with significant financial difficulties.

“We are focused on reducing operating expenses, capital expenditures, and cost of sales while maintaining core investments to execute our strategy,” Intel’s CEO Pat Gelsinger said in a note to employees as part of its “next phase of our multiyear transformation strategy.” He also hinted at taking “decisive actions” to improve operating and capital efficiencies.

A few weeks later, another report suggested that Qualcomm is eyeing Intel’s struggling chip business units. Though there was no clarity on which business units Qualcomm is evaluating to buy, speculations were rife that it may look at Intel’s Altera and Movidius businesses. Analysts believed it would help “fill gaps in Qualcomm’s portfolio.”

However, for now, as per the CRN report, Rivera remains focused on executing the IPO plan and positioning Altera as a specialized leader in the FPGA market.

While this spinoff could initially be seen as Intel stepping back from a rapidly growing market, the long-term view could be different. “In the short-term, the move to spin off Altera could also be viewed as Intel stepping back from a market that is seeing increasing demand, potentially giving AMD/Xilinx an upper hand, but the picture can change in the long-term view,” Chauhan said.