Official At Last: Intel Completes $16.7 Billion Buy of Altera

December 28, 2015, 6:33 PM UTC
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SANTA CLARA, CA - JANUARY 16: The Intel logo is displayed outside of the Intel headquarters on January 16, 2014 in Santa Clara, California. Intel will report fourth quarter earnings after the closing bell. (Photo by Justin Sullivan/Getty Images)
Photograph by Justin Sullivan—Getty Images

Chip giant Intel has completed its $16.7 billion mega-deal to buy Altera, thus getting a big toe hold in the burgeoning market for a new type of chip that is much more flexible than the microprocessors Intel has ridden to fame and fortune.

Altera specializes in field-programmable gate arrays (FPGAs) which can be re-programmed to run new tasks. That agility is critical to the future of computing because it lets companies operating data centers (or wrangling millions of devices out in the field) re-purpose the brains of those devices on the fly instead of having to replace or upgrade the hardware.

Up till now, Intel’s (INTC) strength has been making the powerful but relatively stodgy microprocessors that run traditional personal computers and servers. After that sort of chip is built, it’s pretty much hard-wired to perform a certain set of tasks.

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In November, Intel senior vice president Diane Bryant said Intel would ship the first chip to combine its own hot-selling Xeon microprocessor expertise with some of Altera’s field-programmable smarts sometime in 2016.

WATCH: More on the Altera deal

As Fortune reported in August, Jason Waxman, vice president of Intel’s cloud platform group, said he expected that FGPAs could represent a third of the processors running all data center operations in 2020. No wonder Intel felt the need to buy into this market and announced plans to acquire Altera in June.

MORE: Intel’s first Altera Xeon Chip due in February.

Going forward, Altera will be Intel’s Programmable Solutions Group led by Dan McNamara, formerly vice president and general manager of Altera’s embedded systems group. Altera CEO John Daane will stay on for 30 days to assure a smooth transition, an Intel spokeswoman said. His departure from the company was his choice, she added.

The new Programmable Solutions Group will work with Intel’s existing Data Center and Internet of Things groups to build “highly customized, integrated products,” according to Intel’s statement.

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