Intel has agreed to acquire smaller chip maker Altera for approximately $16.7 billion.
Founded in 1983, San Jose, Calif.-based Altera makes programmable chips used by more than 12,000 customers worldwide. As part of the all-cash deal, Intel will pay $54 a share for Altera.
Intel said it plans to couple its own products and manufacturing processes with Altera's field-programmable gate array (FPGA) technology to develop "new classes of products" for the data center and Internet of Things.
The chip giant will offer Altera's FPGA products with Intel Xeon processors, and make "design and manufacturing improvements" to enhance Altera's offerings.
In a statement, Intel CEO Brian Krzanich said the acquisition falls in line with the company's growth strategy to expand its core assets into profitable, complimentary 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," Krzanich said. "Whether to enable new growth in the network, large cloud data centers or IoT segments, our customers expect better performance at lower costs. This is the promise of Moore's Law and it's the innovation enabled by Intel and Altera joining forces."
The acquisition is subject to regulatory approvals. It's expected to close within six to nine months, at which point Altera will become an Intel business unit to "facilitate continuity of existing and new customer sales and support," Intel said. Intel will continue to support and develop Altera's ARM-based and power management product lines.
"Given our close partnership, we've seen firsthand the many benefits of our relationship with Intel … and look forward to the many opportunities we will have together," John Daane, President, CEO and Chairman of Altera, said in a statement. "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. Together, we expect to drive meaningful value for our customers, partners and employees around the world."