Industrial IoT opportunity is behind Intel’s bid to acquire Altera, says IHS

According to a report in The Wall Street Journal (Friday, March 27, 2015) Intel is in talks to buy Altera. Here, Tom Hackenberg, IHS‘s principal analyst, embedded processing, explains that the Industrial Internet of Things is a key motivation for the deal.

Intel’s largest purchase comes on the heels of a long series of semiconductor mergers and acquisitions – including NXP and Freescale, Cypress Semiconductor and Spansion, Lattice Semiconductor and Silicon Image, Qualcomm and CSR, Infineon and International Rectifier, and several more. Each of these mergers has had an influence on various markets as analysts IHS report.

Intel is the largest supplier of microprocessors (MPU) in the world, with overall semiconductor revenues near $50 billion in 2014 and MPUs comprising 80% of that revenue, says Hackenberg. While not as large as Intel, with $2 billion in 2014 revenues, Altera is the second largest supplier of programmable logic devices (PLD) and system-on-chip (SoC) field programmable gate arrays (FPGAs).

The largest market for Intel’s MPU is computers, including portable PCs and tablets, desktop PCs, notebooks, servers and high performance computing (HPC) platforms. In the last several years, demand has stagnated for PCs and other products in this category, and IHS predicts that the tablet market is entering a saturation phase with slowing growth; however, Intel supplies a host of integrated chip solutions to many markets beyond computers, and it is in many of these markets that Intel has the most potential for continued growth.


The IoT opportunity

Telecommunications infrastructure is perhaps one of the largest synergetic markets for Intel and Altera. Intel is already the leading supplier of high performance wired and wireless telecommunications infrastructure processor solutions, and with an increasing market for Internet of Things (IoT) connected devices, these markets provide opportunity for the right solutions.

Altera’s position as a strong supplier of broadband, networking and telecommunications solutions was likely a crucial consideration for Intel, when the company decided to enter into talks with Altera, says Hackenberg. There are a few small overlaps to consider, such as the Altera SoC FPGA with embedded ARM Cortex A processors; however, on the whole, Intel’s x86 microprocessors and applications processors would be very complementary to Altera’s broad base of programmable logic, especially for networking solutions. Intel microprocessors are optimised for high performance control, and Altera PLDs and FPGAs are flexible and can be easily configured to process huge parallel streams of packet data, as a coprocessor to the MPU, which could be a key strength of the merger.


There are other applications and markets where a high performance MPU and configurable logic are designed to work side by side: Industrial applications for military and aerospace, manufacturing and process control, automotive applications, security and surveillance, broadcast, and many more. Even in HPC, FPGAs will perform coprocessing functions. Whether it is offering complementary solutions, or combining intellectual property in order to create new unique SoCs, Hackenberg concludes that the combined potential of Intel and Altera should be well poised to target a growing telecommunications market and IoT applications.



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