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Intel splurges US$16.7 billion for data centre and IoT gain

08 Jun 2015

Intel has reached a definitive agreement on the much-rumoured US$16.7 billion acquisition of Altera in a move the vendor says ‘enables new classes of product in the high-growth data centre and internet of things market segments.

Intel says the acquisition will couple Intel’s products and manufacturing processes with Altera’s field-programmable gate array technology to enable new classes of products.

Intel plans to offer Altera’s FPGA products with Intel Xeon processes as highly customised, integrated products.

Brian Krzancich, Intel chief executive, says “With this acquisition, we will harness the power of Moore’s Law to make the next generation of solutions not just better, but able to do more.

“Whether to enable new growth in the network, large cloud datacenters or IoT segments, our customers expect better performance at lower cost.

“This is the promise of Moore’s Law, and it’s the innovation enabled by Intel and Altera joining forces.”

Analyst reaction

Daryl Inniss, Ovum components practice leader, says the move continues the spate of semiconductor consolidation and will help Intel enter new markets.

“The data centre server market is Intel’s profit engine, and continued performance improvement is paramount to future business,” Inniss says.

“Intel believes it can improve server performance by a factor of two through chip integration.

“Applications, such as facial recognition, encryption and big data compression would benefit.”

However, Inniss says integration is a two-step process of co-packaging, which is expected to be available in late 2016, and then on-die integrated solutions.

Inniss says the internet of things is a high growth market, still in its nascent stage.

“Inel is selective here and is targeting devices that require a high level of logic and processing.

“It highlighted advanced driving assist systems and plans to compete with application-specifric integrated circuits, the incumbent technology for this application,” Inniss says.

He says Intel’s belief it can expand Altera’s core business by 7% annually ‘will undoubtedly be a challenge’, with Altera’s 2014 revenue the same as it was in 2010.

“Altera does help Intel enter new markets, and Altera’s revenues did increase 12% in 2014 versus 2013. Nonetheless Intel must develop sustained growth to post a good return for its investment.”

Altera will become an Intel business unit and Intel says it plans to continue support and development for Altera’s ARM-based and power management product lines.

The deal is expected to be completed in six to nine months.

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