Intel Corporation (NASDAQ:INTC) Acquires Altera Corporation (NASDAQ:ALTR) Based On Moore’s Law

Intel Corporation (NASDAQ:INTC) eventually inked a deal to acquire Altera Corporation (NASDAQ:ALTR) for $16.7 billion. The move continues the consolidation in the chips industry, and also enables Intel to harness the power of Moore’s Law about processors chips advancement. Intel is looking to create more flexible server and computing products by combining Altera’s programmable chips with its Xeon processors.

Sweetened $54 a share offer

Intel Corporation (NASDAQ:INTC) will pay $54 for every share of Altera to bring the field-programmable chips maker under its control. The announcement of a deal between Intel and Altera ends months of speculations with reports at some point citing that the talks between the companies had fallen off. Intel reportedly offered to purchase Altera at $50 a share in the earlier negotiations, an offer that Altera rejected.

Opportunity to diversify broadly

Altera is expected to support Intel Corporation (NASDAQ:INTC)’s diversification in chips business beyond PC that has been its mainstay. According to Intel’s CEO, Brian Krzanich, the acquisition of Altera will enable them to harness the power of Moore’s Law. As such, the company hopes to drive the next generation of processors chips and also put more power in the chips so that they can do more.

At the same time, Intel Corporation (NASDAQ:INTC) has its eyes on expanding core operations in areas that are more profitable. Intel has been seeking new growth in mobile, a market currently dominated by Qualcomm, Inc. (NASDAQ:QCOM). Altera is expected to boost Intel’s mobile campaigns.

Semiconductor consolidation

Intel’s deal with Altera continues the consolidation drive in the semiconductor industry. In other semiconductor deals, Avago Technologies Ltd (NASDAQ:AVGO) said it was acquiring rival Broadcom Corporation (NASDAQ:BRCM) for $37 billion in what has been described as the largest buyout in semiconductor space.

In both Intel Corporation (NASDAQ:INTC)-Altera and Avago-Broadcom unions, the buyers will benefit from expanded product portfolio and greater revenue potential. Additionally, the buyers will be benefit from increase in bargaining power over manufacturers and customers.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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