Intel is buying Altera for 16.7 billion dollars (approximately 15 billion euros) in its biggest purchase to date.
The world’s largest chipmaker issued a statement confirming its purchase of Altera, which makes field-programmable gate arrays (FPGA).
FPGA can be configured as needed to make servers faster at handling proprietary tasks, like providing web-search results or updating social networks.
Analysts have been describing the deal as expensive and defensive for Intel.
They say the company is hedging itself against the likelihood that the rise of FPGA chips will reduce the need for Central Processing Units (CPUs) – the market that Intel currently dominates.
“This way Intel will profit if customers use FPGAs instead of CPUs,” said FBR Capital markets analyst Christopher Rolland.
“Intel will be the only company that will be able to combine x86 server CPUs with FPGAs onto a single die. This could eventually be a 1 billion dollar market, with the lion’s share going to Intel,” Rolland also said.