Microprocessor chips Giant Intel Corporation (NASDAQ:INTC) may be on the way to acquire Processor chip making company Altera. The acquisition, if it happens, will be worth almost $10 billion. The two companies have refused to comment on the issue; however, such a deal might happen. Intel has been on the lookout to consolidating its microprocessor, custom chips and flexible arrays systems for some time now, and Altera may just fit the bill as far as flexible arrays unit goes.
The deal makes sense due to two happenings in the industry. Firstly FPGAs are way too large and notoriously difficult to program, Altera has expertise in this. Secondly, there is a shift to heterogeneous computing where specificity is required in processing. This means that specific processors are required for various tasks as computing have shifted from homogenous to heterogeneous processing. It is also important that Intel does not lag behind in Digital Signal Processing (DSP), as other companies like Nvidia and AMD have been talking about it lately.
Intel Corporation (NASDAQ:INTC) has a massive monopoly in the servers industry with 98% share. Altera specializes in programmable gate arrays (FPGAs) and is one of the two leading producers of FPGAs, an acquisition will help Intel consolidate its already dominant share in the chips industry. If this deal happens then, it would further solidify the manufacturing base of Intel and ensure full stocks.
An acquisition might also affect Intel’s stocks positively as Altera’s share revenues are climbing faster than Intel’s and are up 12% from last year compared to Intel’s 6.1%. According to another analyst, Roger Kay, “FPGAs are hot and having [Altera] in-house is a big win for Intel.”
Intel Investors have taken the possibility of the acquisition of cheers and the shares of the company jumped up 6.4% to $32 on the news, Altera’s shares climbed up 28% to $44.39 on the news. The deal, if it goes head, at $10 billion will be the largest acquisition Intel would have made thus far.