Wrapping up the year with colossal deals of M&A – Intel claims to get over the biggest procurement pie by acquiring Altera Corp. The semiconductor giant has settled the deal for $16.7 billion with Altera Corp.
The deal is pivotal for Intel because it will swell the strategic focus on FPGAs offering – as Intel’s premium customers like Facebook, Google and Microsoft Corp. is urging for rapid performance, nudging the need for the chipmaker to advance through traditional designing of chips (integrating more transistors on each piece of silicon). Intel’s first product priority after closing the Altera deal will be to encompass the concept.
Intel has cleared plans in 2016 to commence products with Xeon chip and an Altera FPGA in a single package. But The company officials, has promised to pack a traditional processor and FPGA circuitry onto one chip, bringing still greater performance benefits.
Wendell Brooks, Intel’s vice president in charge of mergers and acquisitions, foresee that the first approach could bring a 30% to 50% speed improvement over using processors and FPGAs separately. Integrating the two functions, which won’t occur until after 2016, could double the performance, he said. That combination, he said, should bring dramatic benefits for jobs like facial recognition, which might require computers to search through hundreds of millions of images to find matches.
In a different vein, Brooks said, integrating Intel’s tiny Atom chips with FPGAs could also help the company in new areas such as automobile electronic systems, where the ability to reprogram chips could bring new features to vehicles even after they have been sold to consumers.
Intel is betting that its production technology can help bring such integrated products to market quickly. At the same time, it intends to improve Altera’s products with the goal of taking sales from longtime rival Xilinx Inc. “The biggest impact of the deal is the way Intel can bring its manufacturing process to the FPGA business,” said Mark Hung, an analyst with Gartner Inc.
Intel plans to let Altera operate as a new business unit that will keep the Altera brand and some operations that are far-away to Intel. Future Altera chips will be made in Intel factories, for example, but existing products will continue to be manufactured by Taiwan Semiconductor Manufacturing Co.
The new unit, called the programmable solutions group, also will continue to deliver some products that use processor designs licensed from ARM Holdings PLC. Intel has long fought—largely unsuccessfully—to displace ARM chips from smartphones in favor of its mainstay x86 processor technology.
“We are going to support and develop ARM-based products, just as Altera did historically,” Brooks said.
Linley Gwennap, a Silicon Valley chip analyst who heads a firm called the Linley Group, said the Altera deal illustrates Krzanich’s willingness to try new approaches in search of growth beyond the slowing market for PC chips.
“It’s a big change for them,” Gwennap said. “I really get the feeling that Brian wants to shake things up.”
Most of Altera’s roughly 3,300 employees will remain in their current jobs or be encouraged to find other positions at Intel, Mr. Brooks said. One who won’t stay is John Daane, Altera’s chief executive. The new unit will be run by Dan McNamara, a longtime Altera executive.