Intel acquires Altera

Intel, one of the largest and most popular computer chip makers, completed the acquisition of Altera (which is a major manufacturer of programmable logic devices) for a deal totaling $16.7 billion (at a share price of $54). The deal marks Intel’s biggest ever acquisition.

The move will see Intel, through Altera, become the second-largest manufacturer of programmable logic devices (PLDs), which have an ever increasing scope of applications including aerospace, automotive, computing, and networking. The acquisition is expected to launch a new class of advanced products that will meet consumer needs for faster and more efficient systems. Market sectors expected to be enhanced include data centers and the Internet of things (IoT) divisions. Altera’s products will be advanced vastly thanks to Intel’s integrated device model of manufacturing.

Intel’s move on Altera can be seen as a deliberate effort by the company to retain and efficiently serve Web services of big companies like Facebook, Google, and Microsoft, which rely on Intel’s Xeon processor. Intel will try to augment its traditional processor with Altera’s famous field programmable gate arrays (FPGAs).

Intel’s CEO, Brian Krzanich, stated that the company’s growth strategy is to expand its core assets into profitable, complementary market segments. He reiterated that the acquisition would harness the power of Moore’s law to the advancement of technology and the reduction of cost. It is expected that Intel will combine their conventional processor with Altera’s FPGA circuitry onto one single chip, leading to improvement of performance by an estimated 30 to 50 percent speed boost.

The acquisition also means that Altera will, in all likelihood, move ahead of its competitors like Xilinx, Inc. due to Intel’s efficient manufacturing process and the respected brand name.Altera will also be allowed to keep its own brand and will operate as a new business unit under Intel.

Altera’s CEO, John Daane, was enthusiastic about the acquisition, stating that numerous benefits should be expected after joining hands with the largest semiconductor manufacturer and a proven technology leader. He also said that the partnership would drive meaningful values to consumers, partners, and employees around the world.

The move shows Intel’s willingness to try new strategies in the PC chip industry to ensure that they are ever staying relevant to the changing trends. Wendell Brooks, VC for mergers and acquisitions at Intel, stated that the company would continue to manufacture and develop ARM-based products, just as Altera traditionally did. This decision is in spite of the fact that Intel has failed to win the battle between ARM chips used in most smartphones for their own x86 processor technology.

For consumers, this procurement is a very welcomed event indeed. The joining of these two giants could see chip speeds double over the next several years, although integration of the two functions into one chip (Intel traditional processor and Altera’s FPGAs) is not expected to begin before the end of 2016. Nonetheless, consumers will be anticipating new and better chips from Intel, and the company is confident of being able to deliver products to meet or exceed the consumer’s needs and expectations.