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Is Intel Turning Attention to Broadcom With Altera Deal Gone?

Industry analysts speculate that Intel, now that a deal to buy Altera has stalled, may be interested in larger chip maker Broadcom.

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The reports that negotiations between Intel and Altera faltered didn't mean the end of speculation about Intel wanting to buy somebody to build out its mobile capabilities.

Now speculation has turned to Broadcom, which would offer expertise not only in chips for mobile devices, but also in the networking infrastructure space. However, it would come at a hefty price. Industry analysts have said Intel would have to offer in the range of $50 a share, which would make the deal in the area of $30 billion.

Whether Intel executives would want to pay that much is unclear, but Broadcom's wired and wireless communications products could be a benefit to the giant chip maker, whose Mobile and Communications Group lost $4.2 billion last year. Intel executives in January said they were shifting their focus for the group away from gaining market share and more toward making money. Some analysts believe Broadcom could help the company in the space.

"It makes more sense for Intel to buy Broadcom as it is a purer player in the networking space, but Intel would have to place a similar premium on Broadcom and that could prove hard for Intel to pull off financially," Mark Hung, research vice president for Gartner, told The Street.

Reports about Intel's pursuit of Altera surfaced in late March. Intel is looking to expand its reach into growth markets beyond PCs and servers, with an eye toward such spaces as mobile devices, the Internet of things (IoT) and wearable computing. Altera's expertise in field-programmable gate arrays (FPGAs)—processors that can be programmed through software—was seen as a good fit for Intel.

Intel and Altera already have a relationship. Intel officials over the past couple of years said the company would manufacture Altera's ARM-based quad-core Stratix 10 processors and multi-die devices. Intel also is integrating FPGAs into its Xeon processors.

Neither Intel nor Altera had commented on the reports of negotiations. Less than two weeks later, more reports surfaced that talks had broken off after Altera officials refused a per-share price of more than $50, which would have put the deal at about $10.4 billion. It would have been Intel's largest acquisition since buying security software maker McAfee for $7.7 billion in 2011.

However, not all analysts were convinced the talks between Intel and Altera were over. Patrick Moorhead, president and principal analyst of Moor Insights and Strategy, said breaking off negotiations could be little more than a negotiating maneuver by Altera as board members looked for a better price, Moorhead told eWEEK.

Intel is scheduled to release first-quarter financial numbers April 14.