Intel today said it has agreed to purchase Altera Corp. for $16.7 billion.
Altera makes chips for servers and Intel sees the acquisition as a way of protecting its server business from competition. Specifically, Altera sells field-programmable gate arrays, which are chips that can be programmed by the end customer.
FPGAs are an in-between step for chipmakers in that they aren’t bulk, off-the-shelf products, which are cheap to make, nor are they fully custom chips for customers, which are expensive. The FPGAs let Intel offer semi-specialized products to companies deploying servers for web sites and cloud storage.
Intel expects the deal, which will be funded by cash and debt, to close in six to nine months. Intel makes most of the chips that end up in servers, and many of the chips that end up in PCs, but it has yet to really penetrate the smartphone market. Asus recently began selling the ZenFone 2 in the U.S., which has an Intel processor inside.
