Intel Negotiating to Buy Altera: Reports

Intel could spend as much as $10.4 billion for the chip maker, which represents its largest acquisition since buying McAfee for $7.7 billion.

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Intel reportedly is negotiating to acquire chip maker Altera, a deal that would be the company's largest since buying security software maker McAfee in 2011 for $7.7 billion.

According to The Wall Street Journal, the deal for Altera would be in the range of $10.4 billion, and would bring together two chip companies that have had a growing relationship over the past couple of years.

There were no details regarding terms of a deal or a timetable in the report.

The deal would come at an important time for Intel. The company is the world's largest chip maker and the dominant vendor of silicon in PCs and servers. Intel saw record revenues in 2014—jumping about 18 percent from the year before—due in part to a rebound in a global PC market that had seen sharp declines in revenues and shipments since 2011.

However, company officials earlier this month cut its first-quarter revenue forecast by $900 million, to about $12.8 billion. Executives pointed to small and midsize businesses being more reluctant than larger enterprises to migrate off Windows XP as a key reason for the lower revenue projection.

Intel over the past several years has looked to extend its reach into faster growing markets, such as mobile devices, wearable technology and the Internet of things (IoT). It also has been growing the capabilities in its silicon to better optimize the chips for particular workloads.

Altera's programmable chip technologies, used in an array of applications like cars and phone networks, would bring more capabilities into the fold and could give Intel better traction in growth markets in which other chip makers, including ARM and its partners, participate.

Intel announced in 2013 that it would manufacture Altera's ARM-based quad-core Stratix 10 processors. The deal was part of Intel's larger efforts to grow its foundry business to make silicon products for third parties.

A year later, the two companies expanded the relationship to include multi-die devices, which integrate Altera's field-programmable gate arrays (FPGAs) and systems-on-a-chip (SoCs) with a range of other components—from memory to application-specific ICs to processors—into a single package. Multi-die devices can help drive down production costs and improve performance and energy efficiency of chips for everything from high-performance servers to communications systems.

The multi-die devices take advantage of the Stratix 10 programmable chips that Intel is manufacturing for Altera with its 14-nanometer Tri-Gate process. The combination of Intel's 3D transistor architecture and Altera's FPGA redundancy technology enables Altera to create a highly dense and energy-efficient programmable chip die that can offer better integration of components.

According to The Wall Street Journal, the two companies also have a 12-year agreement in which Intel will not build products for any other programmable chip maker than Altera.

An Intel deal for Altera would be the second significant acquisition in the semiconductor business this month. NXP Semiconductors on March 2 announced it is buying Freescale for $11.8 billion.