Why Did Intel Buy Altera?
In 2015, Intel Corporation, one of the world’s leading semiconductor chip manufacturers, announced its acquisition of Altera Corporation, a prominent provider of programmable logic devices (PLDs). The acquisition marked a significant move in the semiconductor industry, raising questions about the rationale behind this strategic decision. This article aims to explore the reasons why Intel decided to purchase Altera and the potential implications of this merger.
Firstly, the primary reason behind Intel’s acquisition of Altera was to strengthen its position in the rapidly growing market for FPGAs (field-programmable gate arrays). FPGAs are highly versatile chips that can be reprogrammed to perform different tasks, making them highly desirable for a wide range of applications, including data centers, telecommunications, and aerospace. By acquiring Altera, Intel gained access to a strong portfolio of FPGA products, which would help it compete with other leading FPGA manufacturers, such as Xilinx.
Secondly, the merger aimed to enhance Intel’s capabilities in customizing and integrating FPGAs with other semiconductor technologies. This integration would enable the development of new products that combine the benefits of FPGAs with Intel’s expertise in microprocessors and other advanced technologies. By doing so, Intel could offer a more comprehensive solution to its customers, ultimately improving its competitive edge in the market.
Thirdly, the acquisition was a strategic move to expand Intel’s presence in the data center market. As data centers continue to grow in size and complexity, the demand for high-performance, energy-efficient chips has surged. FPGAs play a crucial role in data center infrastructure, as they can be used for tasks such as network switching, storage, and acceleration. By acquiring Altera, Intel gained a competitive advantage in this market, positioning itself as a one-stop-shop for data center solutions.
Moreover, the merger aimed to address the challenges posed by the declining PC market. As the PC market has matured, Intel has been looking for new growth opportunities to sustain its revenue streams. The acquisition of Altera allowed Intel to diversify its business and explore new markets, reducing its reliance on the PC market.
Lastly, the acquisition was a strategic move to strengthen Intel’s intellectual property (IP) portfolio. Altera held a significant number of patents and proprietary technologies, which would further enhance Intel’s position in the semiconductor industry. By combining the resources and expertise of both companies, Intel could develop innovative new products and solutions, fostering further growth and profitability.
In conclusion, Intel’s acquisition of Altera was driven by several strategic objectives, including expanding its presence in the FPGA market, enhancing its capabilities in integrating FPGAs with other technologies, addressing the challenges posed by the declining PC market, and strengthening its IP portfolio. The merger has the potential to create significant value for both companies, positioning Intel as a leader in the semiconductor industry for years to come.
