The deal is Intel's biggest since it bought security software maker McAfee in 2011 for $7.7billion and underscores the company's determination to expand beyond its mainstay - chips for PCs.
Net revenue from Intel's PC group increased just 4% in 2014, while revenue in its date centres group increased 18%, providing just over a quarter of overall revenue.
Intel said that it plans to offer Altera's FPGA products with its Xeon processors to provide highly customised, integrated products. Intel said that it also expected to enhance Altera's products through improvements in both their design and manufacturing by employing its integrated device manufacturing model.
"Intel's growth strategy is to expand our core assets into profitable, complementary market segments," said Brian Krzanich, ceo of Intel. "With this acquisition, we will make the next generation of solutions not just better, but able to do more."
Commenting John Daane, president, ceo and chairman of Altera said: "We believe that as part of Intel we will be able to develop innovative FPGAs and SoCs for our customers in all market segments. This is an exciting transaction that provides immediate and significant value to our stockholders."
Altera will become an Intel business unit to facilitate continuity with existing and new customers. Intel intimated that it plans to continue support and development for Altera's ARM-based and power management product lines.
