Intel Corporation, Altera Deal A ‘Win-Win’ For Both: Analysts

Intel LogoBy The original uploader was VD64992 at English Wikipedia [Public domain], via Wikimedia Commons

Intel is reportedly planning to acquire Altera, though the price of the acquisition and other relevant details are not clear yet. Such a merger would aid Intel with a new business line and provide its factories with new production work while Altera could expand itself in the rapidly growing data center market, believe analysts.

Win-win deal for Intel, Altera

Altera is known for designing field programmable gate arrays (FPGA), which are usually integrated with CPUs to speed up processes such as video compression or encryption and can be programmed to perform a variety of functions.

Intel does not make FPGA chips for its own use but signed a deal in 2013 to manufacture 14-nanometer wafers and FPGA chips for Altera, says a report from Mercury News. Now by buying Altera, Intel could get to produce all the chips in Altera’s repertoire, many of which are currently manufactured by Intel rival Taiwan Semiconductor Manufacturing Company (TSMC). Intel could also combine FPGA with its own CPUs on single chips, which will, in turn, give it an upper hand in building processors for data centers, claims financial analyst Christopher Rolland.

Altera, on the other hand, could expand into the data center market as the company’s existing source of sales. That is, there has been inconsistent demand for the chips used in cellphone towers and other telecommunications applications over the past few years, asserted analyst Robert W. Brian, who believes data centers pose a huge opportunity for Altera chips and that the company could benefit from Intel’s strong presence in the market.

No impact on TSMC

However, the proposed acquisition of Altera by Intel, expected to cost at least $10 billion, will not have any significant effect on TSMC, claims a report from the Want China Times. After the 2013 deal, Altera has already transferred most of the orders to Intel from TSMC, so not much impact would be noticed.

In addition, other Taiwanese integrated circuit design companies will not be influenced as they have never established a presence in the global FPGA chip market. However, the news of a possible acquisition could have short-term effects on the share prices of local semiconductor vendors, says the report.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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