skip to main content
Close Icon

In order to deliver a personalized, responsive service and to improve the site, we remember and store information about how you use it. This is done using simple text files called cookies which sit on your computer. By continuing to use this site and access its features, you are consenting to our use of cookies. To find out more about the way Informa uses cookies please go to our Cookie Policy page.

Global Search Configuration

Ovum view

Summary

Intel Corp. announced reaching a definitive agreement on the much-rumored deal to acquire Altera for $16.7bn, continuing the spate of semiconductor consolidation. Intel aims to use the acquisition to integrate programmable chips and processors, creating new classes of products, and to improve its data center and Internet of Things offerings.

Performance improvements targeted

Intel’s CEO Brian Krzanich highlighted chip performance improvements as an important element in the company’s decision to acquire Altera. Interestingly, he invoked Moore’s Law as an Intel driving force: to continue to deliver higher performance at lower power and cost. Some believe Moore’s Law is nearing its end because decreasing manufacturing nodes – that is, smaller feature sizes used to fabricate chips – substantially increase cost and power consumption. Nonetheless, integrating Altera’s programmable logic devices with Intel’s processors can deliver a new class of products, improve system performance, and drive development of some next-generation devices.

The data center server market is Intel’s profit engine, and continued performance improvement is paramount to future business. Intel believes it can improve server performance by a factor of two through chip integration. Applications such as facial recognition, encryption, and Big Data compression would benefit. But the integration is a two-step process: first co-packaging, to be available in late 2016, and then on-die integrated solutions.

The Internet of Things is a high-growth market that is still in its nascent stage. Intel is selective here and is targeting devices that require a high level of logic and processing. It highlighted advanced driving assist systems and plans to compete with application-specific integrated circuits, the incumbent technology for this application.

Intel estimates it can expand Altera’s core business by 7% annually. This will undoubtedly be a challenge, as Altera’s 2014 revenue was the same as in 2010. Altera does help Intel enter new markets, and Altera’s revenues did increase 12% in 2014 versus 2013. Nonetheless Intel must develop sustained growth to post a good return for its investment.

Appendix

Further reading

“Avago to acquire Broadcom, affirming the importance of scale,” TE0017-000044 (May 2015)

“NXP-Freescale merger targets connected car, IoT opportunities” TE0017-000030 (March 2015)

Author

Daryl Inniss, Practice Leader, Components

daryl.inniss@ovum.com

Recommended Articles

  • Enterprise Decision Maker, Enterprise IT Strategy and Select...

    2017 Trends to Watch: Big Data

    By Tony Baer 21 Nov 2016

    The breakout use case for big data will be fast data. The Internet of Things (IoT) is increasing the urgency for enterprises to embrace real-time streaming analytics, as use cases from mobile devices and sensors become compelling to a wide range of industry sectors.

    Topics Big data and analytics IoT

  • Service Provider Technology, Enterprise Decision Maker

    IT services required to smooth the path to automation

    By Kris Szaniawski 17 Jan 2018

    Ovum expects telecoms-specific IT services to be the fastest-growing segment of the telecoms vendor services market, not just this year but also over the next five years, with a CAGR of approximately 7% over the period.

  • Service Provider Technology

    5G – Deployment and Commercial Considerations

    By Daryl Schoolar 24 Nov 2017

    In a few years, operators will start rolling out commercial, standards-based 5G networks. In doing so, these operators will face a variety of deployment scenarios based on spectrum and other various factors. The deployment decisions they make will impact what the network looks like and the types of services offered.

    Topics 5G

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

+44 (0) 207 551 9047 - Operational from 09.00 - 17.00 UK time

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 7770704398 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now