Intel Eyes Datacenter, IoT with Altera Deal
Intel is targeting the integration of its processors with FPGAs in the datacenter and for the Internet of Things (IoT) with its $16.7 billion deal announced Monday (June 1) to acquire programmable logic vendor Altera Corp.
The world's largest chipmaker said the combination would "enable new classes of products" based on its Xeon processors and Altera's FPGAs, a technology that is making headway in datacenters. Along with cloud datacenters and the IoT, Intel CEO Brian Krzanich said the combined technologies would also be used to unclog networking bottlenecks.
Intel also said it plans to continue Altera's development of processors based on rival ARM Ltd.'s architecture along with Altera's power management products. Analysts noted that earlier efforts to leverage ARM cores were abandoned.
The chipmaker said it would acquire San Jose-based Altera for $54 per share in an all-cash deal. It will fund the purchase with a combination of cash and debt. The acquisition is expected to close in six to nine months, Intel said. Altera reported fiscal 2014 revenues totaling $1.9 billion.
Once the acquisition is completed, "We'll be in a position to enable new classes of products that meet emerging customer needs in the datacenter and the Internet of Things," Krzanich reiterated during a company webcast.
Altera established a foundry partnership with Intel in 2013 to manufacture Altera's Stratix 10 programmable logic devices and systems-on-chip using Intel's 14-nm Tri-Gate process technology.
In stressing product synergies for the combined company, Krzanic highlighted the ability to address emerging customer workloads in the datacenter programmable logic market Intel reckons is valued at about $37 billion. The company expects to integrate its Atom processor line with Altera FPGAs to address segments of the IoT market currently dominated by ASICs and application-specific standard products (ASSPs).
Intel estimates those product synergies will account for about 60 percent the total value created by the acquisition as the chip maker sharpens its focus on the estimated $11 billion market for IoT devices, Krzanich said.
Intel also predicts the integration of its Xeon processor with Altera FPGAs in the datacenter would double the performance of cloud-based applications. It is betting that up to one-third of cloud service providers will leverage FPGAs on standard server infrastructure by 2020, enabling faster implementation of customer intellectual property (IP) and algorithms.
Krzanich said the first shipments of "co-packaged" Xeon processors with Altera FPGAs begin in "the latter half of 2016." They would be followed by integrated "on-die" solutions for the datacenter. "With integration, FPGAs become cost competitive with ASICs and ASSPs," the Intel CEO argued. The company claims the integration of FPGAs with its Atom processor for IoT application, for example, would allow users to program their own IP, replacing ASICs.
In a similar manner, Intel said it could program specific IP into its integrated chips, replacing ASSPs. These systems-on-chip would integrate, for example, workload-specific accelerators.
Krzanich argued that the integration of Xeon and Atom processors with FPGA technology would create "a set of products that do no exist today where you are able to move the software algorithms…down into the silicon and improve performance. That's really what this is creating."
The Intel-Altera deal comes just days after Avago announced it would acquire communications chip specialist Broadcom Corp. for $37 billion. The deal also targets datacenter applications. Altera's main rival in the FPGA market, market leader Xilinx, is also thought to be a takeover target.
The Intel-Altera deal is the latest in a string of chip industry merger, including NXP and Freescale Semiconductor, Cypress Semiconductor and Spansion along with Lattice Semiconductor and Silicon Image.
Industry analysts noted that communications infrastructure and datacenter equipment are among the largest markets for Intel and Altera. The deal makes senses given Intel's focusing on IoT connected devices, according to Tom Hackenberg, an embedded processing analyst with market researcher IHS. "Altera’s position as a strong supplier of broadband, networking and telecommunications solutions was likely a crucial consideration for Intel."
Whether and for how long Intel would continue supporting Altera's ARM core-based development remains to be seen, Hackenberg added. A similar strategy was tried and abandoned in an earlier XScale initiative in which an ARM instruction set was used as part of a CPU microarchitecture.