(Reuters) - Intel Corp is in talks to buy fellow chipmaker Altera Corp in a deal likely to top $10 billion, making it Intel's biggest purchase and the latest merger in the quickly consolidating semiconductor sector, the Wall Street Journal reported on Friday.
An acquisition of Altera, which makes programmable chips widely used in cellphone towers, the military and other industrial applications, would underscore Intel Chief Executive Officer Brian Krzanich's determination to expand into new markets as the personal computer industry loses steam.
Though dominant in the market for chips used in PCs, Intel has been slower than its rivals to adjust in recent years to the growing popularity of smartphones. Earlier this month, Intel slashed nearly $1 billion from its first-quarter revenue forecast to $12.8 billion, plus or minus $300 million, as small businesses put off upgrading their personal computers.
Shares of Altera shot up about 28 percent after at the report to $44.39 per share on the Nasdaq on Friday. Intel shares also gained on the news, rising some 6.4 percent to $32.
Terms of the potential deal for Altera and its timing were not known, the Journal reported. (http://on.wsj.com/195hofq)
Intel declined to comment on the report. An Altera spokesman also declined to comment.
Any deal for Altera, valued at $10.4 billion at Thursday's close, would likely surpass Intel's previous biggest deal, its $7.7 billion purchase of security software maker McAfee in 2011.
Big deals in the chip sector have been expected after NXP Semiconductors'
Worldwide semiconductor M&A reached $31 billion last year, the most since 2011, Thomson Reuters data show. In the 12 months through March 2, 472 chip M&A deals were made worldwide, up from 383 in the previous year.
Unlike typical semiconductors, programmable chips made by Altera can be customized after they are manufactured to suit different purposes.
Intel, the world's largest chipmaker, based in Santa Clara, California and Altera have already been forming a close relationship.
In 2013, Intel agreed to manufacture chips on behalf of Altera, a major change for the world's top chipmaker, which traditionally has been unwilling to share its cutting-edge technology. Since then the two companies have also expanded their cooperation to include other kinds of chip development.
(Reporting by Devika Krishna Kumar in Bengaluru, Noel Randewich in San Francisco and Bill Rigby in Seattle.; Editing by Joyjeet Das and Alan Crosby)
