Intel is buying Altera in an all-cash deal valued at around $16.7bn (£11bn), offering $54 per share, confirming earlier reports of an acquisition.
“Intel’s growth strategy is to expand our core assets into profitable, complementary market segments,” said Intel chief Brian Krzanich.
“With this acquisition, we will harness the power of Moore’s Law to make the next generation of solutions not just better, but able to do more."
Altera makes programmable chips used in Internet of Things (IoT) devices and increasingly cloud computing and the deal expands Intel's reach in these areas.
"Whether to enable new growth in the network, large cloud data centers or IoT segments, our customers expect better performance at lower costs. This is the promise of Moore’s Law and it’s the innovation enabled by Intel and Altera joining forces. We look forward to working with the talented team at Altera to deliver this value to our customers and stockholders,” added Krzanich.
Intel will fund the deal, the largest in its history and due to complete within six to nine months, through a combination of existing cash and debt.
Shares in Altera were up more than six per cent in pre-market trading, while Intel stock remained largely flat.