Intel nears $15bn deal to acquire Altera
Intel is close to acquiring Altera, a maker of “programmable” processors, for as much as $15bn, people familiar with the matter say, in what would mark the California chipmaker’s biggest ever deal.
The purchase could be announced as early as next week, said one person informed about the negotiations between the two companies, and would be the latest in a wave of mergers and acquisitions in the chipmaking sector.
Singapore-based Avago agreed to buy US rival Broadcom on Thursday for $37bn in cash and stock in the largest acquisition seen in the technology world since the late-1990s dotcom bubble.
In March, Netherlands-based NXP agreed to acquire Freescale for about $11.8bn.
Consolidation comes as semiconductor groups, which make the chips that power smartphones, are being squeezed by companies such as Apple and Samsung on pricing. They hope that joining up will give them greater negotiating power and enable them to expand at a time when organic growth remains slow.
Altera, which has more than 3,000 employees in 19 countries, would help Intel diversify further from its dependence on the mature PC sector and soak up some of the excess capacity in its chipmaking plants.
Altera’s chips are used in a range of telecoms and wireless equipment as well as military hardware, automotive and industrial applications and networking, which is a growth area. Its largest customers are telecoms groups Huawei of China and Sweden’s Ericsson.
Brian Krzanich, Intel chief executive, made a renewed focus on manufacturing a key part of the company when he took over two years ago. It already manufacturers some products for Altera, a company that develops and designs chips but relies on companies such as Intel and TSMC, the Taiwanese manufacturer, to produce them.
Altera’s shares rose 4 per cent on Friday after the New York Post first reported that the companies were nearing a deal. Intel’s shares also rose a modest 1.3 per cent.