Consolidation in the chip sector continues as the world’s largest chipmaker gets larger.
BY JACOB PALMER | DIGITAL NEWS EDITOR
Consolidation in the chip sector continues as the world’s largest chipmaker confirmed Monday a deal to get larger.
Intel will purchase programmable chip company Altera for $16.7 billion.
The companies have had an on-again, off-again courtship since at least March, when word of a potential deal leaked out and sent Altera’s shares soaring. But Altera apparently rebuffed Intel, seeking more money, and the companies reportedly called off talks at least once before returning to the table.
The deal adds relatively little to Intel’s top line – Intel’s revenue was nearly $56 billion last year; Altera’s was less than $2 billion. It could, though, position Intel for rapid changes in the computer chip industry. Intel said it will use Altera’s technology in server farms and in the emerging Internet of Things — connected appliances, wearable computing and other technologies for bringing everyday products online. Intel said it will bundle Altera’s programmable chips with Intel’s own, high-end Xeon processors.
Intel chief executive Brian Krzanich said on a conference call that the company “can make the next generation of semiconductors not just better but truly able to do more” with the move.
The Silicon Valley Business Journal reports on potential synergies for Intel:
Intel manufactures some high-end semiconductors for Altera, which designs chips but turns to others to produce them, according to the Wall Street Journal. A tie-up means Intel can augment its processor-chip business with another revenue source during a time when slowing demand for personal computers is constraining Intel’s own growth, the article said. It will also help Intel defend its business in chips for server systems, as companies have been using chips from Altera and Xilinx Inc. to help increase their servers’ speed, it said.
Altera specializes in programmable chips used in cellphone towers and other industrial applications. It sells field-programmable gate arrays — integrated circuits that are designed to be configured by a customer or a designer after manufacturing.