Partners Cheer As Altera-Intel Buyout Talks Reportedly Resume

Intel is back in talks to acquire programmable custom-designed semiconductor manufacturer Altera, according to a Monday report by the New York Post.

The report of a possible deal, which could top $13 billion, sent Altera's shares skyrocketing 7 percent, to $47.50, in pre-market trading Monday, according to CNBC.

CRN has reached out to both Intel and Altera for comment, but neither has responded as yet.

[Related: Intel Partners Tout Vertical Solutions To Pave The Way In IoT Market]

Partners lauded the potential acquisition, pointing to Intel's interest in Altera as a signal of its investment in the potentially lucrative Internet of Things market, as the PC market -- over which Intel has long reigned -- slows down.

"Intel's interest plays toward their drive to continue to own the enterprise market is some way or another," said Douglas Grosfield, president and CEO of Cambridge, Ontario-based Xylotek Solutions, an Intel partner. "With the PC business at a standstill, they are looking at how to integrate programmable chips and get a leg up, as computing moves to the Internet of Things and wearables market, through companies like Altera."

"As a partner, this opens opportunities for us in the channel to have those conversations with our customers and get them thinking about applications for wearables in the enterprise space," he added.

Reports of Intel's potential acquisition of Altera originally surfaced in late March, but later, sources stated that the talks had fizzled after Altera reportedly rejected an offer of $54 per share, according to The Wall Street Journal.

Altera is best-known for its field programmable gate arrays, or FPGAs, which are integrated circuits that are designed to be configured by a designer after manufacturing. Altera's FPGAs include different features like embedded memory, digital signal processing blocks and high-speed I/O pins for varying end products.

The San Jose, Calif.-based company's FPGAs power an array of Internet of Things applications, such as Smart City infrastructure, intelligent factory automation, Smart Grid and data center acceleration.

Intel and Altera have a long-standing existing foundry partnership, as Altera announced in 2013 it would begin to utilize Intel's technology in its chip design.

Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based Intel system builder, said the deal wouldn't have much impact on traditional system builder partners, but that Intel's move into the Internet of Things market is a "necessity."

"It will be interesting to see what types of products this marriage would bring to fruition and, more notably, how Intel may enlist its channel partners to both drive demand and provide fulfillment for them," Kretzer said.

The Internet of Things space opens opportunities for Intel's partners to tap into niche vertical markets.

Intel powers the Internet of Things through its portfolio of SoCs, such as the Intel Quark SoC x1000 and Intel Atom Processor E3826, which make up intelligent gateways to collect sensor data at the network edge.

According to the Santa Clara, Calif.-based company, IoT revenue in the first quarter of 2015 was $533 million, up 11 percent from the same quarter a year ago. In the PC market, meanwhile, Intel readjusted sales guidance for the full year, saying it now expects revenue to be flat for 2015, at $55.9 billion.

Intel recently offered further incentives to expand its IoT-focused partners' presence in the vertical market by offering extended specialty benefits in the Internet of Things retail vertical, giving partners vertical market branding, technical resources to close complex deals, and highly specialized education and training.

Citing a person it said was familiar with the matter, the New York Post reported that an outcome is expected of the talks in a few weeks.

PUBLISHED MAY 18, 2015