The deal is worth $4.46 billion to Intel and is the first major move by the company’s recently appointed CEO Lip-Bu Tan.
The move, which values Altera at $8.75bn, is seen as a first step in Tan’s efforts to revitalise the performance of the US chipmaker, which has been struggling against intense competition from the likes of TSMC and Nvidia.
The valuation of the company, however, is well short of the $17 billion Intel paid for Altera in 2015, but the sale will provide Intel with cash after former CEO Pat Gelsinger strained its finances investing heavily in contract manufacturing services.
Tan's strategy is to streamline the chipmaker following a failure, on the part of his predecessors, to diversify the business beyond its PC and server chip businesses, so selling assets like Altera form a crucial part of his broader strategy for the business.
"Today's announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet," said Tan, who became CEO in December last year after the ousting of Gelsinger.
Intel has been looking to spin out Altera, which makes programmable chips, for some time and the deal is expected to close in the second half of 2025.
Raghib Hussain, a former executive at custom AI chipmaker Marvell will take over from Sandra Rivera as Altera CEO from May 5.
Altera posted revenue of $1.54 billion in 2024, accounting for just 3% of Intel's total sales, and reported an operating loss of $615 million.
Analysts expect to see Intel divest more assets with self-driving tech firm Mobileye Global likely to be considered as a ‘non-core’ asset that Intel could look to sell off.
