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Published on : Jun 03, 2015

The accelerating cost of manufacturing chips is pushing Intel’s billions of dollars purchase of Altera. Similarly, many other big mergers are beings witnessed in the semiconductor industry.

A decade back the cost from designing a new chip to transforming it into a product was recorded around US$10 million to around US$50 million. However, in the present scenario this cost is now US$100 million to US$200 million. To resolve this bizarre and challenging physics issues at this small size call for a lot of expensive equipment. This is why the Mergers and Acquisitions will help to deal with this challenging issues.

The list of recent deals in the semiconductor industry show questions whether the number of the M&As deals will be able to solve the issue of cost savings. Furthermore, apart from gaining economies of scale in buying Altera, the firm Intel will benefit in many other ways.

The primary chips from Altera will help the giant Intel to focus on the two of the largest emerging markets. They will also help Intel to focus on so called IoT (Internet of Things), large data centers, or computer enriched systems which work with other devices.

The chips from Altera will be reprogrammed after they leave their foundry. On the other hand, Intel’s semiconductors are now more powerful, but they lack the required flexibility. Nevertheless, by blending the two types from these firms into a single chip, the giant Intel is aiming that by the late next year it can begin offering its big business consumers ways of fine turning the performance to meet their specific needs.