Jun 01, 2015 05:03 AM EDT
In what could become its biggest acquisition ever, the giant chipmaker Intel is in talks to buy Altera for a price said to be above $10 billion. The deal, if it becomes a reality, would add about $2 billion to Intel's annual revenue.
The news of the deal was first reported by Wall Street Journal. And since the news broke, Altera shares jumped up to 28 percent to $44.39. Also, the Intel-Altera deal has pushed up the shares of Xilinx - the main rival of chipmaker Altera - by more than 6 percent to $32.
The giant of chipmakers, Intel, has a market value of $151.6 billion. This being said, the chipmaker's earlier acquisitions were relatively smaller compared to the Altera deal, which might happen any day now.
According to USA Today, the Intel-Altera deal could help Intel diversify the market for its chips beyond personal computers into cloud computing.
According to The New York Post report on the deal, Intel is close to buying Altera's chip-making business for $15 billion.
In the past Intel and Altera have worked together in manufacturing chips. In 2013, they struck an arrangement, which saw Intel offer its most advanced production process to Altera to manufacture FPGA chips under contract and also offer some of its Xeon chips for servers combined with Altera's FPGA chips.
The Intel-Altera deal has led to speculations about the possibility of Xilinx's acquisition by immediate Intel rivals, possibly IBM or Qualcomm.
After CEO Brian Krzanich took charge in 2013, Intel has been desperately trying to catch up to its rivals, especially Qualcomm Inc and the deal to buy Altera is seen as a move to compete against its top rivals and to make a strong impact in the mobile devices market, and wearable computing devices.
Meanwhile, Intel has cut its revenue growth for Q1 by nearly $1 billion to roughly $12.8 billion.