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The first fruits of Intel's biggest buy ever will come this quarter

Intel welcomed employees from its massive Altera acquisition this week, and the first products from the deal will come out this quarter.

The chipmaker poured out $16.7 billion [B] to buy Altera, which makes FPGAs (field programmable gate arrays), or chips that can be reprogrammed for specific tasks. The first chip that combines Intel and Altera technology will go into servers, cars, robots, the Internet of Things, automation equipment and other products, Intel says.

Intel will start shipping its first server chips with Altera's FPGAs to select "leading-edge" cloud customers this quarter, Intel CEO Brian Krzanich said during an earnings call on Thursday.

The products will be multi-chip modules, in which Intel's server chips and Altera FPGAs will be separate processing units. The modules are scheduled for mass production next year.

The ability to reprogram Altera FPGAs will make it easier for Intel to create custom chips, which Krzanich said are accounting for a larger chunk of server chip shipments.

Intel is also working to integrate Altera's intellectual property inside its own silicon, improving performance and power efficiency, Krzanich said. He gave no release date for those chips.

Intel had already announced its intention to provide server chips with Altera FPGAs. It hadn't clearly stated plans for Altera IP in its own chips until now.

The Intel-Altera product roadmap was announced during an earnings call for the fourth quarter of 2015, which ended on Dec. 26. The acquisition of Altera, which closed on Dec. 28, will boost revenue in fiscal 2016, Intel officials said.

The purchase is also part of Intel's effort to pivot into other areas as the PC market weakens. The memory, data center and Internet of Things divisions generated 40 percent of Intel's revenue in fiscal 2015, and that share will grow in 2016, Krzanich said.

Altera will be part of a new group called Programmable Solutions Group, which will report to Krzanich. It'll be much like Intel's Security Group, which was created after the McAfee acquisition.

Intel posted revenue of $14.9 billion for the fourth quarter of 2015, growing by 1 percent from the same quarter in 2014. Its profit was $3.6 billion, down by 1 percent.

Revenue for the Client Computing Group, which deals in PC and mobile chips, was $8.8 billion, declining by 1 percent year-over-year. The Data Center Group recorded revenue of $4.3 billion, up by 5 percent. Revenue for the IoT group grew by 6 percent to $625 million.

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