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Intel set to make its biggest acquisition yet, in talks to acquire the $10.8 Billion valued chipmaker, Altera Corp.

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Altera, the company that manufactures PLDs, power SoCs DC-DC solutions and better known as Xilinx’s rival in FPGA manufacturing, might turn out to be one of the biggest acquisitions Intel has ever made, according to a WSJ report.

The first impact the news made was on the market shares of both companies. Altera saw a 28% increase, reaching $44.39 per share on Nasdaq when it closed, taking it from a $10.4 billion market valuation to around $13.4 billion closing. Intel rose 6.2%- closing at $32.

Representatives of both companies declined to comment.

The radical shift from the PC centered markets to smart phones has left Intel in the lurch. It has faced $1 billion cut in its first-quarter sales forecast earlier this month- major blow coming from small businesses as they put off upgrading their personal computers; and the prediction that PC sales will drop by 4.9% this year. The mobile division hasn’t fared very well either, with the company bearing the brunt of a loss ratcheting up to $4.21 billion in 2014.

The last time Intel made an acquisition of this size, was almost four years back in 2011, when it closed on a $7.7 billion deal to buy one of the largest security-software companies, McAfee.

So, it doesn’t really come as a surprise if the Chief Executive Officer of Intel, Brian Krzanich is looking towards expansion in new markets. The majority of Altera’s revenue flow comes in from sectors like military, aerospace, wireless and telecomm, making it ideal for diversifying into new territory. What has thrived though is Intel’s data-center group, where profits reached $7.28 billion on sales of $14.4 billion in 2014, and that is where Altera and its low power programmable semiconductors come in.

Intel and Altera had reached a manufacturing agreement in February 2013, which stated that Altera chips would be made in Intel’s cutting-edge technology.

PHOTO: RICH WILKING/REUTERS

 


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