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Last week Intel acquired eASIC, a fabless semiconductor company that makes customizable eASIC chips for use in wireless and cloud environments. The actual transaction amount for this merger was not disclosed by Intel. They believe that this acquisition is more “strategic” than just pure business as the competition for FPGAs is booming due to increasing demand for data and cloud services.

The rise of FPGAs and Intel’s strategy to diversify beyond CPUs

FPGAs were first introduced back in the 80s and were considered as an evolution in the path of fabless semiconductors. With each passing year, researchers have been trying to find innovative solutions to improve system performance, to meet the needs of big data, cloud computing, mobile, networking and other domains. FPGA is at the heart of this quest to develop high performing systems and is being paired with CPU’s to facilitate compute-intensive operations.

Intel has a Programmable Solutions Group (PSG), which they created after acquiring Altera in 2015 for $16.7 billion. Altera is considered to be one of the leading FPGA manufacturers. The idea behind the eASIC acquisition is to complement Altera chips with eASIC’s technology. Dan McNamara, corporate vice president and GM of the PSG division mentioned in the official announcement, “We’re seeing the largest adoption of FPGA ever because of explosion of data and cloud services, and we think this will give us a lot of differentiation versus the likes of Xilinx”.

Xilinx leads the race in the FPGA market with Intel being a distant second. The acquisition of eASIC is seen as a step towards catching up with the market leaders. Intel’s most recent quarterly earnings reports showed that PSG division had earned $498 million with 17% compound annual growth rate (CAGR), whereas on the other hand the company’s biggest division ‘Client Computing Division (CCG) made $8.2 billion but with a CAGR of 3%.

Although PSG’s overall revenue is small when compared to CCG, it shows potential in terms of future growth. Hence Intel plans to increase their investments in acquiring futuristic companies like eASIC. It wouldn’t be surprising that we will see more such acquisitions in the coming years.

You can visit Intel’s PSG blog for more interesting news on FPGAs.

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