Semiconductor giant Intel (INTC +2.31%) agreed earlier this year to sell a majority stake in FPGA designer Altera to an investment firm. Intel paid $16.7 billion for Altera back in 2015, but it was never able to thrive within the larger company. During the first half of 2025, Altera generated revenue of $816 million, a gross margin of 55%, and had $356 million in operating expenses, according to an SEC filing from Intel.
For comparison, Altera generated $454.4 million in the fourth quarter of 2014, which was prior to the acquisition. Over the span of more than a decade, Intel has completely failed to nurture Altera, and revenue has stagnated.
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The deal is done
In an SEC filing on Monday, Intel disclosed that the deal to dispose of a majority stake in Altera was complete. The transaction officially closed on Sept. 12, with Intel receiving $3.3 billion in exchange for a 51% stake in Altera. Intel retains a 49% interest in the company, making it a minority owner. Intel's third-quarter results will include revenue and expenses from Altera through Sept. 11. After that date, the accounting treatment will switch to the equity method.
Due to the accounting change, Intel has revised its outlook for full-year operating expenses. Intel now expects its non-GAAP (adjusted) operating expenses for 2025 to be around $16.8 billion, down from a previous $17 billion target. For 2026, Intel's operating expense target of $16 billion remains unchanged.
Selling a majority stake in Altera accomplishes two things for Intel. First, it raises billions in cash at a time when Intel needs capital to fund its foundry ambitions. Second, it gives control of a non-core business to someone else, freeing up focus and resources. Altera is capable of thriving under the right leadership and ownership structure, and Intel will still benefit as a minority shareholder if the company can turn things around.
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Key Data Points
A string of cost cuts
The Altera sale come amid a broad cost-cutting initiative from CEO Lip-Bu Tan, who took over earlier this year. Significant layoffs started over the summer, with Tan noting that teams had become too large, and that the culture around managers growing the size of their teams needed to change.
Intel has also taken other steps to rein in costs. The company shut down its automotive business in June, eliminating another non-core business and laying off most of the employees involved. The company also disclosed that it would outsource its marketing operations to Accenture, which will use artificial intelligence to boost efficiency. Intel has already been reducing advertising costs, lowering spending from $1.2 billion in 2022 to $856 million in 2024.
Together, these moves will help Intel reach its operating expense target for 2026.
Cost-cutting isn't enough on its own
While Intel certainly needs to reduce its costs to reflect its market share losses, the company also needs to return to revenue growth. That means regaining share in the PC and server CPU businesses, as well as winning substantial customers for the foundry business.
The Intel 18A process, which will be used by Intel's upcoming Panther Lake and Nova Lake chips on the PC side, and by Diamond Rapids and Clearwater Forest on the server side, will be critical to the company's comeback. Intel 14A, the next-generation process node, will need to win over some external customers for the foundry business to work in the long run.
One risk that always comes along with cost-cutting is the potential for Intel to cut itself off at the knees. Intel needs to lay off a substantial number of employees while retaining and attracting the talent necessary to stage a comeback in its PC and server CPU businesses. And it needs to make the foundry operation leaner and more efficient even as it scrambles to win over customers. Balancing both sides of the equation will be tricky.
The sale of a majority stake in Altera, though, is a positive development. Altera never reached its full potential as part of Intel, and it's no longer a distraction as the company plots a comeback.
