Why is Altera so important to Intel?

Intel plans to buy FPGA company, Altera. If successful, and it is difficult to think of a reason why it shouldn’t, the $17bn deal will be Intel’s largest ever acquisition.

On an Intel scale, Altera is a relatively small company with sales revenues of $2bn in 2014.

Intel is paying a fairly high price for the company. So what has Altera got which Intel seems to prize so highly?

It has world-class programmable logic technology and this could be integrated with Intel’s processors. This would fit well with Intel’s plans for processor markets such as wired and wireless telecommunications infrastructure and data storage.

Altera has a 40% share of the $5bn programmable logic market. It is not market leader that is Xilinx.

Some of this business is in communications infrastructure, but a healthy chunk of it is in wider embedded processing markets from healthcare to automotive and IoT.

Away from PCs, tablets and servers, these are markets where Intel has to work harder to get its processors designed in.

Altera’s customer base and programmable product portfolio could be an asset for the more expansive Intel.

Communications infrastructure and data centre cards are the markets where the products of Intel and Altera work together most closely.
Market watcher IHS believes it is Altera’s position as a strong supplier of broadband, networking and telecommunications chips was a crucial consideration for Intel.

Altera also has an ARM processor licence. Whether Intel sees this as strategically important or irrelevance is difficult to judge.

It seems likely that Intel will continue to support Altera’s FPGAs and SoC devices with embedded ARM Cortex-A processors. To do otherwise would be commercial suicide.

But what it will look to do will be to investigate ways of integrating its own processor cores with Altera’s programmable and configurable embedded processing platforms.

The two firms already work together on advanced process technology at 20nm and 14nm process nodes.

So Intel had a good insight into Altera’s skill in creating high performance and power optimised FPGA architectures.

It decided this was the type of embedded processor technology which it could make good use of in key markets such as communications, data centres and IoT.

Perhaps the acquisition doesn’t seem so surprising after all.

 

Richard Wilson

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