In­tel buy­ing chip designer Al­tera for about US$16.7 bil­lion


In­tel is buy­ing chip designer Al­tera for about US$16.7 bil­lion in cash to ex­pand its reach into new chip mar­kets that are pow­er­ing the wire­less revo­lu­tion, smarter cars and more.

The deal is the big­gest in In­tel Corp.’s 47-year his­tory. It is the lat­est in an in­dus­try that con­tin­ues to look to ac­qui­si­tions as a way to boost lack­lus­ter sales and cut costs as sales fall for per­sonal com­put­ers as cus­tomers in­creas­ingly turn to smartphones and tablets.

While In­tel al­ready works with Al­tera on the man­u­fac­tur­ing of cer­tain kinds of high- end chips, In­tel CEO Brian Krzanich said that own­ing the com­pany will al­low In­tel to fully in­te­grate that man­u­fac­tur­ing and put in place de­sign and pro­duc­tion im- prove­ments, ul­ti­mately low­er­ing costs and im­prov­ing the prod­ucts.

The deal also will give In­tel the abil­ity to cre­ate new prod­ucts and busi­ness lines, Krzanich said on a con­fer­ence call with in­vestors.

Al­tera is known for mak­ing chips used in phone net­works and cars, mar­kets that In­tel has been look­ing to ex­pand in. In­tel is look­ing for new op­por­tu­ni­ties in grow­ing chip mar­kets, as de­mand for PCs, and the chips that power them, con­tinue to decline, as more peo­ple use smartphones and tablets to connect to the in­ter­net.

“Their PC chip busi­ness is go­ing down­hill, and so here’s a way to bol­ster their earn­ings by get­ting into a dif­fer­ent type of busi­ness,” says Tony Cherin, fi­nance pro­fes­sor emer­i­tus at San Diego State Uni­ver­sity.

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