Intel, Altera Extend Foundry Partnership - Analyst Blog

Intel Corporation INTC has expanded its foundry partnership with Altera Corporation ALTR to manufacture advanced multi-die devices. According to the earlier agreement, Intel was to manufacture Altera's ARM-based quad-core Stratix 10 processors, an advanced version of its FPGA (Field-Programmable Gate Arrays) chips, using proprietary 14 nanometer (nm) trigate transistor technology.

Now, it will also put together FPGAs and chipsets, also known as systems-in-a-chip (SoCs), with elements like application-specific integrated circuits (ASICs), processors, DRAM, SRAM and other devices to produce a system-in-a-package.

An FPGA is a semiconductor programmable logic device PLD that can be programmed by the customers/original equipment manufacturers (OEM) after manufacturing. The flexible nature of the FPGA is preferred by many customers over the low-cost, fixed-function ASICs.

The collaboration should be a positive for both parties, as long as the process is not too delayed. Altera's rival Xilinx is going with traditional manufacturer TSMC, which still lags Intel in process technology. Intel and Altera are currently developing experiment mediums to test streamlining, manufacturing and assimilation flows. Once it takes off, Intel's advanced manufacturing will facilitate the fabrication of highly integrated, more powerful chips that also generate less heat at lower costs. However, if Intel's own rollout is too delayed, this advantage will be lost.

As far as Intel is concerned, this is a golden opportunity to ramp production at its fabs and drive up utilization rates. Intel has previously stated that its foundry partnerships are strategic agreements, so there may be closer collaboration between the two going forward.

Intel is applying a number of strategies to increase its foothold in mobile, wearables and Internet of Things (IoT). This will help to reduce its dependence on the PC market, which is at present suffering from declining sales worldwide. These are emerging areas within the technology space with companies like Cisco CSCO, Google GOOG, Apple and Facebook among others trying to build a position.

Currently, Intel holds a Zacks Rank #3 (Hold).