Intel Corp is in discussions to buy Altera Corp, a designer of specialized computer chips, a person briefed on the matter said on Friday. It would be one of the company’s biggest deals ever.
Specifics including a potential takeover price and timing were unclear, and the person cautioned that talks were continuing and might fall apart.
DIVERSIFICATION
Intel, long regarded as one of the most powerful technology companies, has worked to diversify its customer base as its mainstay business of supplying chips for personal computers has declined amid rising competition from mobile devices.
This month, it cut its sales forecast for the first quarter by nearly US$1 billion, citing weaker-than-expected demand from companies, particularly small businesses, for new PCs.
Under Brian Krzanich, who took over as chief executive officer less than two years ago, Intel has been scrambling to gain a presence in mobile devices and has become a more flexible manufacturer of different kinds of chips. It is also diving into a range of technologies like smartwatches and security products that rely on the human body.
FPGA
Now it is pursuing Altera, a 22-year-old company best known for field-programmable gate arrays, or FPGAs, a type of semiconductor whose functions can be adjusted or upgraded after the product is shipped. These are different from the standard chips that go into computers, Intel’s great strength, which are created for specific tasks.
Chips that can be reprogrammed in the field generally have less power and complexity than their application-specific counterparts, but are popular in automobiles, consumer devices and aerospace products.
Last year, Intel introduced a hybrid FPGA-application specific chip, promising greater speed and flexibility for certain computing tasks.
Altera, based in San Jose, California, reported US$472 million in profit and US$1.9 billion in sales last year.
As of Thursday’s market close, a day before the Wall Street Journal reported the merger talks, Altera had a market value of about US$10 billion.
CASH FLUSH
Intel’s biggest acquisition to date was the US$7.5 billion takeover of the security software maker McAfee Inc nearly five years ago. Just six of its deals have been worth more than US$1 billion, according to data from Standard & Poor’s Capital IQ.
Intel has plenty of resources to do a big deal. The company had US$14.4 billion in cash and short-term investments on its books as of late last year.
Representatives for Intel and Altera declined to comment or were not immediately available for comment.
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