With Altera becoming part of Intel, the San Jose-based company is likely to focus on the x86 microprocessors made by the world’s biggest chip company, rather than those made by companies such as ARM Holdings Plc ARM.L.
Altera now provides chips for both x86 and ARM-based processors.
“(The combined Intel-Altera) will likely become x86 centric and neglect the large and growing ARM-based applications,” said Xilinx’s senior vice president of strategy, Steve Glaser.
That gives Xilinx and Lattice the opportunity to take a bigger share of the ARM-based market - Xilinx at the high end and Lattice at the low end.
Lattice Chief Executive Darin Billerbeck told Reuters this week he expected the Intel-Altera deal to increase his company’s total addressable market by $300-$400 million.
“I think within communications and the industrial, we’ll see some of the benefit right away,” he said.
Programmable-chips are used in everything from smartphones to cars and can be combined with computing processors to speed up servers in data centers.
Intel processors are geared to function with high-performance desktops and servers, and consume a lot of power. ARM-based processors are more power-efficient as they take less time to perform a function, making them suited for smartphones.
Intel has said that combining Altera’s chips with its own server processors, such as the x86, will let it offer twice the computing power.
However, analysts said customers looking for faster microprocessors may now become concerned about becoming overly dependent on Intel.
Many may prefer to do business with a company that only makes programmable-chips, such as Xilinx and Lattice, they said.
“I think (Xilinx) is going to continue to gain market share ... I think Lattice should benefit as well,” Robert W. Baird analyst Tristan Gerra said.
Intel may well assign programmable chips to “second-class-citizen priority, where fussing over customers is alien,” analysts at brokerage Raymond James wrote in a client note.
Lattice’s market-share gains are likely to last longer than Xilinx’s, given its focus on the low end of the market, an area that is not likely to be a priority for Intel, analysts said.
Xilinx, though, could face stiffer competition down the road after Intel and Altera fully integrate and start offering new products. Intel has said it will take six-to-nine months to close its deal with Altera.
Drexel Hamilton analyst Richard Whittington, who covers Xilinx, said the company had the opportunity to grow in the programmable chip market for the next two years. After that it “invites the question of who will win and succeed,” he said.
Xilinx’s shares have risen about 18 percent and Lattice’s about 2.5 percent since March 27 when the Wall Street Journal reported that Intel and Altera were in talks.
An Intel spokesman declined to comment for this story. Altera did not respond to a request for comment.
Editing by Ted Kerr