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Silver Lake is in talks to buy a majority stake in Intel’s Altera unit as the chipmaker works to shed non-core assets and bulk up its finances to invest billions of dollars in modern chip fabrication plants in the US and Europe.
Intel hired advisers last year to find private equity groups willing to build a sizeable stake for Altera, a business it acquired for about $17bn in 2015, believing specialist investors could help revive the unit. Intel said a stake sale would boost Altera’s value and set the stage for a full exit.
Altera has attracted interest from rival chipmakers, but Silver Lake, a US private equity group, has emerged as Intel’s preferred option, said three people familiar with the matter.
The firm, which manages more than $100bn in assets, is known on Wall Street for its ability to revive large technology businesses such as Dell. It has also invested heavily in the semiconductor industry and installed Hock Tan as the chief executive of Avago, the acquisitive predecessor to what is now Broadcom.
Although talks are still at a preliminary stage, a deal with Silver Lake would inject billions of dollars into Intel’s coffers.
The potential deal, which was first reported by Bloomberg, comes as President Donald Trump looks at ways to revive the fortunes of the chipmaker.
His administration is leaning on industry leader Taiwan Semiconductor Manufacturing Company to explore partnerships with Intel, said people who spoke to the Financial Times. Such a tie-up would send shockwaves through the industry, which has been exposed to geopolitical tensions with China over the supply of chips.
Over the weekend, the Wall Street Journal reported Broadcom is exploring a deal with Intel. Rumours of a potential buyout of part or all of Intel’s business — which includes both chip design and manufacturing — have dogged the company for months. In September, US chip designer Qualcomm also approached Intel about a deal.
Intel shares closed up about 16 per cent on Tuesday on speculation of a broader break up of the company with TSMC.
Intel and Silver Lake declined to comment.
Intel began a big cost-cutting effort last summer, slashing thousands of jobs and halting manufacturing projects in Europe as its chip “foundry” business ran at a multibillion-dollar loss.
After interim co-CEO and chief financial officer David Zinsner vowed to pursue efficiencies and restructure the business, the company announced the spin-off of its venture capital arm Intel Capital.
Intel’s declining fortunes, which led to the board ousting chief executive Pat Gelsinger in December, have amplified national security concerns because it is the only US company that can potentially manufacture leading-edge chips.