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Microsoft Corporation (NASDAQ:MSFT) Is The Big Winner From Intel Corporation (NASDAQ:INTC) Altera Deal

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Microsoft Corporation (NASDAQ:MSFT) is looking to change the way the Bing search engine is powered and, if successful, other search engines are likely to follow suit. Intel Corporation (NASDAQ:INTC) bought Altera this week and the deal could have huge effects on Microsoft’s search plans.

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As it is, the warehouse-sized data centers used to power data centers use ordinary processors. Those are normally made by Intel, the largest chip maker in the world. The Intel-Altera deal may change all that at Microsoft.

Microsoft gets into “deep learning”

Last summer, Microsoft launched a pilot project called “Project Catapult“, an idea first put forward by Microsoft researcher Doug Burger in 2012.

The plan involves building huge numbers of computer servers that used FPGAs (field-programmable arrays). Microsoft can modify these processors for use with its own software. According to Burger, these chips, which are made by Altera, could greatly speed up Bing searches.

Originally, the project was due to be complete in early 2015, but Burger insists that his team “is really heads-down right now” trying to get it done. Within the next few months Bing searches may very well be carried out by one of his servers.

Burger says that the potential use for the chips is huge and lots of research is being done to try to figure out “the right combination of algorithm and platform that gives you the best results.” Not only could they be used to speed up Bing searches, the chips could also change the way all of Microsoft’s other online services are run.

The chips are also helping to speed up the development of face identification and speech recognition technology. Microsoft have said that the chips could be used inside their “deep learning” systems, which are used for this purpose.

Intel acquires Altera

Given the interest Microsoft has been openly showing in Altera, it’s no surprise that for the past few months Intel has been trying to acquire the semiconductor firm. Intel has had difficulty doing so, with a bid for Altera being rejected in April. On Monday however, Intel announced that a deal had finally been agreed.

In an all-cash deal valued around $16.7 billion, Intel will buy Altera for $54 per share. Both companies have approved the deal. If the deal passes shareholder votes and regulatory approval, Intel will own Altera within nine months.

It has been a busy year in the semiconductor industry so far. The Intel news news came just days after Avago announced it bought Broadcom, and less then three months after Freescale was acquired by NXP Semiconductors.

The move is sure to be watched closely by Microsoft, who are a huge customer of Intel and have been openly speaking of the potential Altera chips offer.

Other larger firms such as Google and Facebook are sure to be watching closely. These firms, along with Microsoft, have been updating the hardware used to power their servers. They now use GPUs to power their AI tools, such as language processing, image recognition and speech recognition. They are also looking into the use of low power chips in order to reduce costs and increase speeds.

It will still be a few months before “Project Catapult” is fully operational, but based on its success it could lead to changes in the hardware used in data centers, and how Microsoft’s search business develops from here on in.

The Intel deal with Altera will make it that much easier, and the long friendship between the firms is sure to be a boon in the months and years ahead.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.