SAN JOSE -- Altera Corp. here today announced a long-term agreement with Nortel Networks Corp. to cooperate in development of future products and technologies. In addition to the R&D pact, Nortel has signed a five-year purchasing agreement to gain access to Altera programmable logic devices and system-on-a-programmable-chip (SoPC) solutions.
Terms of the agreements were not disclosed by the companies, but the Wall Street Journal today reported that the supply pact was estimated to have a value of several hundred million dollars a year. Neither company could confirm that estimate for SBN.
According to Nortel, programmable logic ICs from Altera will help it be more competitive by reducing costs and speeding the introduction of new networking systems. The Canadian communications systems company is also expecting to benefit from a new operating model and tighter business connections with Altera under the agreements. The two companies said the alliance will cut costs and improve inventory control management.
"This will establish Altera as one of our major semiconductor suppliers," said Ken Bradley, chief procurement officer at Nortel. "The time-to-market and cost advantages of Altera's PLDs and SOPC solutions will position Altera to significantly increase its penetration into our product lines, and to move into a select group of key suppliers to Nortel Networks."
Altera and Nortel said their new strategic agreements bring together their operations to enable rapid definition and development of next generation optical, local arena networking and wireless Internet equipment that uses programmable logic technology. "We are taking this first step toward something far more than just a buy-sell relationship," stated John Daane, president and CEO of Altera.
Nortel said it expects to enhance its position through shorter development cycles with Altera's next-generation SoPC solutions and MegaCore intellectual property functions. In addition to new product development, Nortel expects to use Altera's programmable logic technology to integrate of older or obsolete products that will lower costs and increase profitability of systems.