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Intel Closes the Deal with Altera, Part of a Broader Trend

By Paula Bernier January 07, 2016

Virtualization is clearly one of the leading new trends in networking today. In yet another development illustrating that fact, Intel has purchased Altera for $16.7 billion. The deal was finalized late last month.

Intel says that bringing Altera into the fold will enable it to become the dominant player of FGPA-based NFV.

"We will apply Moore's Law to grow today's FPGA business, and we'll invent new products that make amazing experiences of the future possible – experiences like autonomous driving and machine learning," commented Intel CEO Brian Krzanich.

Altera exists as a new business unit within Intel called that Programmable solutions Group. The effort is headed up by Dan McNamara, who comes from Altera. That group will continue to support Altera’s existing products, which include FPGA, ARM-based SoC, and power products, as well as new solutions.

FPGA stands for field programmable gate array. It’s a technology than is more programmable than Intel’s semiconductors, and thus better able to address a broader scope of applications. FGPA is also attractive because it can more easily be altered as requirements evolve.

In addition to the applications Intel’s CEO mentions above, Altera has been working on high-definition video, intelligent vision-related systems, the Internet of Things, and virtual memory.

Intel announced its intention earlier last year to buy Altera. The New York Times on May 29 reported a deal between Intel and Altera was likely, said two companies began discussions earlier this year, but Altera rejected Intel’s initial $54-per-share bid, after which Altera’s quarterly earnings fell below expectations. At that point, according to the Times, Altera investor TIG Advisors pushed for the company to reignite its conversation with Intel.

News of the Intel-Altera deal announced in June came days after Avago Technologies announced plans to buy Broadcom for $37 billion. The Motley Fool said that deal set up Avago to better compete with Qualcomm, a pioneer in providing semiconductors for smartphones that in recent months has been struggling to improve its business, seen its stock price plummet, and is fighting against a push by some shareholders to break up the company.

This has all taken place among what a Dec. 16 New York Times piece notes was a record year for semiconductor company mergers. According to the Times, through September 2015 this product category saw more than $77 billion in mergers, which is about six times the average amount.

Edited by Kyle Piscioniere

Executive Editor, TMC

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