Intel announced Monday it had agreed to acquire Altera for roughly $16.7 billion, continuing a wave of consolidation in the semiconductor industry.

Altera’s programmable logic chips are used in a variety of markets, ranging from communications to consumer electronics. According to Bloomberg, the deal “may help Intel defend and extend its most profitable business: supplying server chips used in data centers.”

“Intel’s growth strategy is to expand our core assets into profitable, complementary market segments,” Intel CEO Brian Krzanich said in a news release. “With this acquisition, we will harness the power of Moore’s Law to make the next generation of solutions not just better, but able to do more.”

“Whether to enable new growth in the network, large cloud data centers or [Internet of Things] segments, our customers expect better performance at lower costs,” he added.

Intel will pay $54 a share in cash to acquire Altera, a premium of 11% over Altera’s closing share price on Friday and 56% from March 26, the day before the possibility of a transaction was first reported.

Intel’s move follows Avago’s announcement last week that it had inked a deal to acquire Broadcom for $37 billion, the largest deal ever in the semiconductor sector.

“Management teams are looking at their business and predicting little growth going forward,” Northland Securities analyst Gus Richard told Bloomberg. “The M&A wave is a function of them trying to drive earnings growth.”

Bloomberg noted that Intel has been trying to find more customers, outside of its own chip business, for its factory network, which the company says is the most advanced in the industry. Altera has been the biggest customer of that fledgling effort.

“The acquisition will couple Intel’s leading-edge products and manufacturing process with Altera’s leading field-programmable gate array (FPGA) technology,” Intel said.

In trading Monday, Altera stock rose about 6% to $51.78, while Intel stock fell about 1.75% to $33.86.

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