By Milana Vinn

(Reuters) – Buyout firms Silver Lake and Bain Capital are among the potential suitors competing to acquire a minority stake in Altera, the programmable chips business that Intel (NASDAQ:INTC) acquired for nearly $17 billion in 2015, according to sources familiar with the matter.

Intel has initiated a process to spin Altera out as a separate company and started the stake sale process in recent weeks. The discussions are in their early stages, and Intel is preparing to receive initial bids from potential buyers soon.

Private equity firm Francisco Partners has also shown interest in acquiring a stake in Altera and is likely among the bidders, according to one of the sources. The sources, who requested anonymity as the matter is confidential, cautioned that a deal is not guaranteed.

Intel hopes to achieve a valuation for Altera that is similar to what it paid in 2015, though it remains uncertain how much of Intel's stake will ultimately be sold; any deal could be valued at several billion dollars. For Q3, Intel reported that Altera's revenue grew 14% sequentially, reaching $412 million.

"We remain focused on selling a stake in Altera on a path to its IPO in the coming years. To that end, we have begun discussions with potential investors and expect to conclude in early 2025," Intel CEO Pat Gelsinger told analysts during the post-earnings conference call last week.

An Intel spokesperson declined further comment beyond the company's call remarks. Representatives for Silver Lake and Bain declined to comment, while Francisco Partners did not respond immediately.

The transaction is expected to provide Intel with a much-needed cash boost as it explores options to reduce overall costs by divesting businesses it can no longer afford to support.

Despite an optimistic revenue forecast from its latest quarterly report, Intel's stock remains over 50% lower for the year due to its struggles and missed opportunities in the AI boom.

San Jose, California-based Altera manufactures programmable chips that can be adapted for various applications, including processing videos and use in military and telecommunications.

Before Intel's acquisition, Altera's chips were produced by Taiwan Semiconductor Manufacturing Co (TSMC). Intel later moved production to its facilities amid a manufacturing lead loss to TSMC, resulting in a costly transition for Altera and a loss of market share to its rival, Xilinx (NASDAQ:XLNX), which was acquired by Advanced Micro Devices (NASDAQ:AMD).