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.