Altera Turns Twenty

6/23/2003 - Altera Corporation (NASDAQ: ALTR) is marking its 20th anniversary this week by celebrating two decades of growth and industry leadership. The company, which was founded in June of 1983, also launched several major industry breakthroughs including the first reprogrammable logic device, the EP300 device in 1984 and the first PC-based development system, giving engineers the ability to design integrated custom logic on their desktop. Altera also pioneered a number of unique business strategies since its founding, including the fabless business model that today is a standard for success in the semiconductor industry, as well as the broad use of distributors world-wide to sell its products.

“Our continued success is a testament to the vision of our founders who invented reprogrammable logic and pioneered a revolutionary business model twenty years ago. That we remain a leading innovator in the industry today is a result of the quality of our technology and, most importantly, the dedication, skill, and hard work of our employees around the world,” said John Daane, president, CEO, and chairman of the board at Altera.

Industry’s First Reprogrammable Logic Device
The idea behind the EP300 device was to provide designers with a programmable array logic (PAL)-like device that could be reprogrammed, while being architected to scale higher to challenge the logic density of gate arrays.

Altera’s founders looked to employ CMOS technology along with a suitable reprogrammable element that allowed designers to alter the device’s configuration. For this, they used erasable programmable read-only memory (EPROM) in an entirely new way, applying the technology to logic applications. This first product, the erasable programmable logic device (EPLD) was manufactured using a 3-micron CMOS EPROM technology and required ultraviolet light to erase the device prior to reprogramming. The EP300 device, which had 300 gates and 8 macrocells, was programmed using “Alterans,” the company’s original place-and-route engine. Also in 1984, Altera released the EP1200 device, the world’s first high-density CMOS PLD with 1,200 gates and 28 macrocells. The basic concept of a standard product that could be customized by an engineer at the desktop was a blockbuster idea, the effects of which are still shaping the semiconductor industry today. This innovation from Altera has expanded into today’s $3 billion PLD market, with technologies ranging from EEPROM to SRAM to flash and antifuse.

“Altera’s early success with its reprogrammable logic devices made the phrase “time-to-market” a mainstream term in high technology and created a new paradigm in engineering system development,” said Erik Cleage, Altera’s senior vice president of marketing. “Consequently, getting to market first took on an unprecedented level of importance among our customers.”

Innovation in Semiconductor Business Model
Altera’s innovative approach to business during the past two decades has involved more than just leading-edge technology. Altera was the first semiconductor company to define its entire strategy around a fabless business model. The company’s business plan called for a fabless strategy to focus the company’s resources on developing reprogrammable chip technology and the related value-added areas of software, product, and test engineering, while outsourcing wafer manufacturing. This unique outsourcing strategy allowed the company to minimize capital expenditures and to establish an operating model with consistently superior gross margins.

In July 1984, using a fab from Ricoh, the company’s first foundry partner, Altera shipped the EP300 device. Its subsequent technology and second-sourcing partnership with Intel Corporation was a major breakthrough that broadly acknowledged the merits of Altera’s approach. Intel’s wafer technology provided the basis for Altera’s initial revenue ramp in the 1980s. In an ironic twist, Altera, then entering into hyper-growth, bought Intel’s PLD business in 1994. Since that time, the expansion of the fabless business model across the semiconductor industry has led to the emergence of today’s successful foundry business, exemplified by the rise of independent wafer fabrication companies like TSMC.

In tandem with developing an efficient back-end manufacturing process, Altera was the first to recognize the power of distributors as a demand-creation selling channel. The company created the idea of installing dedicated trained FAEs around the world to fuel the rapid proliferation of programmable technology. That decision in the early 1980s helped the company become one of the first American semiconductor companies to earn a major portion of its revenues from the Japanese market, where Altera quickly became, and is now the number one supplier of PLDs.

Silicon Foundry on a Desktop
Altera also led the way in recognizing the power of the PC as an engineering design tool at a time when most companies were using more expensive engineering workstations. Altera’s revolutionary A+PLUSTM software was the first complete design tool developed for the IBM PC, just two years after the desktop computer was introduced to the market. The company’s first major advertisement campaign—“Silicon Foundry for Sale - $2500”—said it all. Additionally, Altera’s MAX+PLUS® II software, introduced in 1991, was the industry’s first Windows-based development software.

With the objective of using its very flexible reprogrammable technology, Altera eliminated the barrier to entry for logic integration and made it accessible to all design engineers. “The founders’ vision was that the PC would eventually find its way to every desktop,” Cleage continued. “It is the reason why tens of thousands of designers today are designing complete electronic systems on their desktops. And now, through the power of the Internet, team-based system design has become a powerful new time-to-market advantage.”

From Glue Logic to Systems on a Programmable Chip
PLDs have come a long way from initially providing simple control and glue logic functions. Today, whole systems reside on single programmable chips, largely due to Altera’s innovations. Among its many technical feats, the company is credited with developing the first embedded memory blocks on PLDs, the first embedded microprocessor and first built-in transceivers. These features have enabled entirely new classes of applications for programmable logic.

Altera continues to be recognized by the industry as a leader in innovation. Most recently, its StratixTM FPGAs, built on a revolutionary architecture with embedded DSP blocks and Tri-MatrixTM memory blocks, was recognized in April by EDN magazine as the “Digital IC of the Year” in the publication’s 2002 Innovation of the Year competition.

“Altera has brought down the cost of programmable technology by a factor of a thousand since the original product, enabling a wide range of applications including wireless network switches, Internet routers, powerful data storage systems, and digital televisions,” Daane explains. “Altera devices have been an enabling technology for many of today’s most successful high-technology companies. Innovation will continue at a rapid pace and I can envision programmable devices with billions of transistors and more than 100 million gates becoming mainstream devices over the next two decades. The future for programmable logic is virtually limitless. I am very pleased to be a part of this ongoing revolution,” Daane concluded.

About Altera
Celebrating its 20th anniversary this year, Altera Corporation (NASDAQ: ALTR) is the world's pioneer in system-on-a-programmable-chip (SOPC) solutions. Combining programmable logic technology with software tools, intellectual property, and technical services, Altera provides high-value programmable solutions to approximately 14,000 customers worldwide. More information is available at

Altera, The Programmable Solutions Company, the stylized Altera logo, specific device designations and all other words that are identified as trademarks and/or service marks are, unless noted otherwise, the trademarks and service marks of Altera Corporation in the U.S. and other countries.

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