Intel Just Gave Up Competing With Nvidia… And That Might Be the Smartest Thing They’ve Done in Years

Besides the headlines about their new CEO investing in Chinese military-linked firms through his venture capital business (not exactly the best look when you're pitching yourself as America’s chip security backbone), the tone surrounding Intel has started to really shift.

After years of falling behind competitors like Nvidia and AMD (and watching its market share disappear like an iPhone headphone jack) Intel’s stock has quietly held its ground. It’s down just around 2% year-to-date, which, in this economy, basically counts as a small miracle right? At a time when tech names have been getting dragged, Intel’s ability to stay flat is almost... impressive.

Of course, most of that improvement comes from behind the scenes, where Intel has been working hard. Part of that strategy includes selling off assets that aren’t central to its core business, and one of the most significant moves could happen soon.

Intel is nearing a deal to sell a majority stake in Altera, its programmable chip division, to private equity firm Silver Lake, at a reported valuation of around $9 billion. That’s a far cry from the $17 billion Intel paid for it back in 2015, but hey… when you’re cleaning out the closet, sometimes you sell the $500 coat for $150 just to make rent. Altera’s chips are used in telecom and AI applications, but apparently not in the version of Intel’s future Tan is planning.

Silver Lake came out ahead after months of talks, reportedly offering the clearest path to increasing Altera’s value. The deal is being led by Ken Hao, who’s kind of a big deal himself in semiconductor land (he helped turn an old HP chip division into what eventually became Broadcom). In other words, this isn’t Silver Lake’s first walk around the park.

Still, Intel plans to keep a large minority stake in Altera (aka: cash out but still get credit if it does well later), while Silver Lake takes operational control. The deal could be announced soon, but like most private equity deals, it’s still subject to change if market volatility picks up… or someone gets cold feet.

This is just one piece of a larger reset being driven by new CEO Lip-Bu Tan, who replaced Pat Gelsinger after the board finally decided that enough was enough, and that something needed to change… fast. Tan’s message has been pretty logical: Intel needs to focus on custom silicon, next-gen manufacturing, and stop spreading itself thin trying to be all things to all markets.

Earlier this year, Intel spun off Intel Capital, its VC arm, in another sign that the company is cutting distractions and raising cash. That cash is badly needed… Intel’s chip fabrication plans in the U.S. and Europe are expected to cost tens of billions. And with governments on both sides of the Atlantic begging for domestic chip capacity, Intel is trying to position itself as the answer to a very expensive geopolitical question.

The irony is that Tan, the guy leading this “Made in America” resurgence, also runs Walden International, a VC firm that’s backed a number of Chinese companies tied to military contractors. So while Intel is shaking hands in D.C., Tan’s side fund has been busy wiring money across the Pacific. (You really can’t make this stuff up.)

Still, this version of Intel looks more disciplined than what we've seen in recent years. Instead of chasing trends or trying to compete head-to-head with Nvidia in AI accelerators, the company is starting to prioritize areas where it still has a structural advantage: manufacturing.

If the Altera deal goes through, it would free up capital and allow Intel to sharpen its focus on what will actually grow the company. Holding a minority stake also gives them the chance to benefit from any upside if Silver Lake succeeds in turning Altera around. Smart business deal if you ask me.

And no, the stock isn’t ripping higher just yet. But for once, people are watching Intel not just because they expect it to mess up… they’re watching to see if this version of the company might actually pull it off.

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Stock.News has positions in Intel.