Back on September 12, Sandra Rivera, CEO of Altera, noted that any idea that chip stock Intel (INTC) might sell its stake in Altera was “…not sourced from anyone that actually knows what’s happening.” The new reports suggest they might have known more than Rivera realized, as Intel is reportedly looking to get “billions” for its Altera stake. The news notched up Intel’s share price, gaining fractionally in Friday afternoon’s trading.
In fact, Intel is looking to get somewhere around $17 billion for its stake in Altera, and is willing to sell a minority stake, or even a full majority stake, getting out of Altera altogether. Given that Intel purchased Altera for $16.7 billion back in 2015, it is not exactly looking to land a huge profit on the sale. Given the rate of inflation since 2015, Intel would be taking a clear loss as $16.7 billion in 2015 has roughly the same purchasing power as $21.45 billion today.
Intel’s need for new cash is well-known at this point. It has been frantically paring back its expenses—including staging huge layoffs—in a bid to keep more cash in the company. Its foundry ambitions have proven expensive, and its market share losses to competitors are not helping all that much either.
TSMC Is Not Interested in Intel
Meanwhile, any notion that TSMC (TSM) might have an interest in buying Intel’s fabrication operations is likely just that: a fabrication. TSMC, according a report from Tom’s Hardware, has no interest in buying Intel’s fab operations. C.C. Wei, TSMC’s chairman and chief executive, made that much abundantly clear during its earnings call.
Buying in on Intel’s fabrication capacity is a tall order; it would certainly be expensive, regulators would likely get involved, and there are even possibilities that Intel’s technology, and even way of life, would be incompatible with any buyer’s. Intel’s fabrication systems are sufficient to challenge any other large-scale chipmaker out there, reports note, which makes an acquisition a major purchase.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 35.65% loss in its share price over the past year, the average INTC price target of $25.34 per share implies 12.32% upside potential.
