By Dana Mattioli and Dana Cimilluca
Intel Corp. is in talks to buy Altera Corp. in a deal that would
be the chip-making giant's largest takeover ever.
Terms of the potential deal and its timing couldn't be learned,
and it is possible there ultimately won't be one.
With a market capitalization of $10.4 billion before The Wall
Street Journal's report Friday, Altera would be a big bite for
Intel, which has traditionally stuck to smaller acquisitions
whenever it has done deals.
Intel is a giant in the chip industry, with a market
capitalization of about $140 billion, but weakening demand for
personal computers has hurt its results. This month, the Santa
Clara, Calif., company cut its revenue outlook for the first
quarter by nearly $1 billion to roughly $12.8 billion.
Altera, based in San Jose, Calif., designs processors used in
phone networks, cars and other products.
Intel, which supplies most of the chips that serve as
calculating engines in PCs and server systems, began suffering
several years ago as consumer spending shifted from laptop
computers to tablets and smartphones. Rival chip designs have been
used in many of those products.
Intel and Altera have a history of cooperation. In 2013, Altera
announced that it would begin using Intel technology in its chip
designs. As part of a 12-year agreement between the companies,
Intel agreed that Altera would be the only major programmable-chip
maker for which it would help build products.
Acquisition activity among such companies has picked up of late.
Just this month, NXP Semiconductors NV agreed to buy Freescale
Semiconductor Ltd. for $11.8 billion.
Intel's last big acquisition was in 2011 when it closed on a
$7.7 billion deal to buy security-software company McAfee Inc.
Intel stock, which had risen 18% in the past year, rose 6.4% to
$32 following the Journal's report of the potential acquisition.
Altera stock, down 2.5% in the past 12 months, jumped 28% to
$44.41.
Altera rival Xilinx Inc. jumped 5.9% to $42.32.
Write to Dana Mattioli at dana.mattioli@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
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