The chipmaker Intel is buying a company that makes … chips. Altera will cost about $16.7 billion in cash.
It would be the largest acquisition in Intel’s 47-year history, and it’s part of an effort to secure business. While Intel is an undisputed leader in chips for personal computers, it’s got competition in the mobile, wireless age.
The Wall Street Journal describes the deal as part of a “consolidation wave” in the semiconductor industry “as companies search for new sources of revenue growth.”
Altera makes programmable chips that are increasingly popular to maintain and speed up server farms. Microsoft is already a client, using the company’s “field-programmable gate array (FPGA) technology” to power its Bing search engine.
Intel says in a statement that the marriage of talents “is expected to enable new classes of products that meet customer needs in the data center and Internet of Things (IoT) market segments.”
The two are already partners. The much smaller company designs high-end chips that Intel builds in its factories.
Altera rejected a similar deal in April. Back then investors got upset and urged the company to reconsider. Bloomberg reported: “The letters question Altera’s ability to create enough value on its own to match Intel’s offer, said the people, who asked not to be identified because the letters are private.”
After the deal was announced, Altera’s stock jumped 6 percent a share in midday trading on Wall Street.