Intel announced Monday a major move to expand its foundry business. Altera Corporation and Intel Corporation have entered into an agreement for the future manufacture of Altera FPGAs on Intel's 14nm tri-gate transistor technology. These next-generation products, which target ultra high-performance systems for military, wireline communications, cloud networking, and compute and storage applications, will enable breakthrough levels of performance and power efficiencies not otherwise possible.

"Altera's FPGAs using Intel 14nm technology will enable customers to design with the most advanced, highest-performing FPGAs in the industry," said John Daane, president, CEO and chairman of Altera. "In addition, Altera gains a tremendous competitive advantage at the high end in that we are the only major FPGA company with access to this technology."

Intel promised Altera access to the 14nm process for 12 years to satisfy long-term availability requirements of defense and other customers, Daane said. The agreement will allow Altera the use of other nodes, but Altea will focus on high-end parts at 14nm initially. Intel has yet to disclose the details about its 14nm tri-gate technology.

Daane told Reuters he believes Intel’s manufacturing technology will give Altera’s chips a several-year advantage against Xilinx, Altera’s main competitor.

While Intel has built manufactured chips in collaboration with other companies in the past, this particular announcement with Altera is a significant step in the unfolding timeline of its 14nm technology.

"They've crossed over the line from it just being a questionable experiment to - we're going to do this for tier-1 customers," said RBC analyst Doug Freedman to Reuters.

Daane said he believes Intel is two to four years ahead of other foundries with its 14nm FinFET process, which Altera plans to use to on its highest-end FPGAs, giving them advantages in power, performance and density.

"We are essentially getting access like an extra division of Intel. As soon as they're making the technology available to their various groups to do design work, we're getting the same," Daane said.

Altera's next-generation products will now include 14nm, in addition to previously announced 20nm technologies, extending the company's tailored product portfolio that meets myriad customer needs for performance, bandwidth and power efficiency across diverse end applications.

"It's a step in terms of building into a business level we wish to achieve," Sunit Rikhi, Vice President and General Manager of Intel custom foundry, told Reuters on Monday. "There's no doubt in my mind the foundry will be a significant player in the future."

Altera still plans to use TSMC as its primary foundry, which will continue to supply its current processes and fulfill Altera’s product portfolio.