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Intel CEO: Altera deal will improve chip performance

Krzanich: Altera deal about bringing PGA market into Intel

Intel's purchase of smaller chipmaker Altera will help improve the performance of its chips, CEO Brian Krzanich said Monday.

The acquisition is about bringing Altera's programmable gate array [PGA] into Intel, "which can really accelerate performance considerably, up to 2x performance improvements as a result of the combination of the products," Krzanich said in an interview with CNBC's "Closing Bell."

Intel announced earlier Monday it agreed to buy Altera for $16.7 billion, or $54 a share. Intel ended the day up 1.61 percent, and Altera closed up 5.79 percent.

Krzanic said Intel's customers were asking for the products.

"They want this power performance that this product can deliver," he said.

"For the big cloud providers, a 2x improvement in performance is huge. It really provides them not only with a competitive advantage but a cost advantage as well. That's what really fuels the cloud."

Read MoreWhy Intel needs to buy Altera: Expert

The deal was the third big one in the chip industry this year. Last week, Avago Technologies agreed to buy for $37 billion in the industry's biggest-ever takeover.

Because the industry is maturing, there will be M&A occurring for at least the near future, Krzanic noted.

While Intel is always "on the lookout" for acquisitions, he said this latest one will take some time to go through the regulatory process.

"Certainly we're going to be looking for value to our shareholders constantly, both internal investment and investments in acquisitions."

The company also does a lot of acquisitions in the smaller range and will continue to do that, he said.

Read MoreAvago to buy Broadcom in $37 billion deal

—Reuters contributed to this report.