Chip maker Intel is buying competitor Altera for $54 a share in an all-cash deal, totaling about $16.7 billion.
This deal will allow Intel, the world’s largest maker of chips, to expand its horizons from chips for personal computers to chips for smart cars and other technologies. Altera is known for making programmable chips that can be customized by the customer. This is useful for people store date online in a cloud, as that type of chip is often used for cloud storage.
Officials at Intel have high expectations for the future, continuing to preach their theory that the number of transistors on a chip will double every two years.
"With this acquisition, we will harness the power of Moore's Law to make the next generation of solutions not just better, but able to do more,"
said Intel CEO Brian Krzanich.
"Whether to enable new growth in the network, large cloud data centers or IoT segments, our customers expect better performance at lower costs."
Another advantage Altera chips present is they can be designed much more quickly than Intel’s processors. Intel is predicting that programmable chips will soon be used on cars. The programmable chips, known as FPGA are cheaper and more flexible than the current ASIC chips. This sort of technology will drastically reduce time spent programming.
"Altera does custom logic chips, which you can do in days, weeks or months. When Intel does a new chip ... it really takes three years from tweaking the memory and the processor and the cache and things on it. It's pretty much three years from concept to delivery,” said Richard Doherty, Research Director of the Envisioneering Group in New York.
The deal is expected to be finalized by the end of the year or early 2016. It has been unanimously approved by the boards of both companies, but is subject to closing conditions and approval of Altera’s stockholders.
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