After months of dancing around, Intel has purchased chipmaker Altera for $16.7 billion, ending months of takeover speculation.
The acquisition will mean Intel will get Altera's coveted, super high margin, field-programmable gate array (FPGA) tech, which are essentially chips that customers program after purchase. The acquired unit will boost the range of offerings in Intel's datacenter business.
The company is focusing on its enterprise business of slow business conditions in the PC and mobile arena. While Intel dominates the PC market, its mature and so not growing very fast. Intel has also missed most of the action on mobile phones to date.
Yet it is the biggest player in the increasingly lucrative datacenter space, a market which is hot because of the switch to cloud computing. Cloud offerings are underpinned by thousands of servers running tens of thousands of processors, which are invariably Intel.
Its new offerings mean it will now account for a greater percentage of the chips inside a datacenter computer server.
Brian Krzanich, Intel's CEO, said: "Intel's growth strategy is to expand our core assets into profitable, complementary market segments."
John Daane, president of Altera, added: "Given our close partnership, we've seen firsthand the many benefits of our relationship with Intel—the world's largest semiconductor company and a proven technology leader, and look forward to the many opportunities we will have together."
The merger comes after an announcement last week that chip designer and supplier Avago bought chip designer Broadcom in a mega-deal worth $37 billion.