Intel has announced that they are acquiring FPGA-maker Altera in a $16.7 billion all-cash deal. The boards of both companies have signed off on the acquisition, and Intel expects the deal to close in six to nine months' time.

Intel had reportedly been in talks with Altera to acquire the company since March, but before this the two companies were already working together closely. As Altera is a fabless company, Intel worked with them to produce FPGAs on its 22nm and 14nm manufacturing nodes, after Intel opened up its fabs to other companies in 2013.

Altera is currently the second-largest manufacturer of FPGAs and programmable logic devices, behind its major rival Xilinx. The Californian company, founded in 1983, reported revenues of $1.93 billion for their 2014 fiscal year.

Following this acquisition, Intel can complement their current line-up of processors and ASICs with FPGA technology. This will be especially beneficial in the IoT and server markets, where FPGAs can provide better performance and efficiency in highly-specified tasks. For example, Intel has already begun integrating FPGAs into some Xeon products, allowing customers to design their own semi-custom processors.

Intel will also be able to use Altera to expand into new markets, giving them a strong presence in the FPGA market alongside their traditional strengths in PCs and servers.