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Field Programmable Gate Arrays are the hot new thing.



COURTESY: INTEL - Ronler Acres where the bulk of Intel's research and development takes place

Intel announced Monday it has agreed to buy fellow chipmaker Altera Corporation for approximately $16.7 billion.

Intel will pay $54 per Altera share in an all-cash transaction.

The deal will be Intel’s biggest ever. Intel’s market capitalization (the number of shares times the share price) is around $160 billion.

Intel said in a statement that the acquisition will “couple Intel's leading-edge products and manufacturing pßrocess with Altera's leading field-programmable gate array (FPGA) technology.”

The products made by the combined companies will be used in data centers and in the Internet of Things market segments.

An Intel spokesman said if the deal goes through they could start shipping Intel and Altera chips in the same package by the end of 2016. Ultimately they will be printed on the same piece of silicon.

COURTESY: INTEL CORP - Intel CEO Brian Krzanich just oversaw the company's biggest ever acquisition in its push to remain relevant in the cloud and IOT eraIntel plans to offer Altera's FPGA products with Intel Xeon processors as highly customized, integrated products. The companies also expect to enhance Altera's products through design and manufacturing improvements resulting from Intel's integrated device manufacturing model.

Field Programmable Gate Arrays (FPGAs) are semiconductor devices based around a matrix of configurable logic blocks (CLBs) connected via programmable interconnects. They can be reprogrammed after manufacturing, which makes them more flexible than Application Specific Integrated Circuits (ASICs).

FPGAs are like a large set of switches divided into modules. Software can tell those switches how to behave. They will work more quickly because the work is done at the silicon level. When the application changes, they can be reprogrammed instead of having to be replaced.

Intel is betting that this will be useful for companies that reply on cloud based applications, which is where the economy is headed. Take for instance firms that uses facial recognition software in a cloud-based system. Facebook and Google tag photos by recognizing common faces in your photoalbums. The tiny difference in speed of having processing done at the level of hardware rather than software can speed up the rate at which such applications work, making them very attractive.

Brian Krzanich, CEO of Intel, said "Intel's growth strategy is to expand our core assets into profitable, complementary market segments. With this acquisition, we will harness the power of Moore's Law to make the next generation of solutions not just better, but able to do more.”

Moore’s Law, or the rule that says chip speeds double every 18 months, turned 50 years old this year.

John Daane, President, CEO and Chairman of Altera, added "We believe that as part of Intel we will be able to develop innovative FPGAs and system-on-chips for our customers in all market segments."

COURTESY: INTEL CORP - Altera CEO John Daane

Altera will become an Intel business unit to facilitate continuity of existing and new customer sales and support. Intel plans to continue support and development for Altera's ARM-based and power management product lines.

Intel intends to fund the acquisition, which is expected to close within six to nine months, with a combination of cash from the balance sheet and debt.

Altera shares were around $35 in March. Altera rejected an offer of $54 per share once, but Altera’s recent poor earnings report gave Intel more leverage.

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