SANTA CLARA (CBS SF) – Intel is buying Altera for $16.7 billion, even more than expected when reports surfaced on Friday that a deal was going to happen.

San Jose-based Altera specializes in programmable chips for all sorts of things like cars, industrial uses and communications applications, and its been making solid inroads into data centers, an area of strength for Intel as the world’s biggest chipmaker looks to expand beyond the weakening PC business and also make a push into mobile, where it lost $4-billion last year, and is forecasting another $3-billion loss this year.

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Intel figures, with the rise in smartphones and tablets, cloud-based servers will continue to grow and it wants to dominate the space much the way it did with PCs for so long.

Its the biggest purchase in the history of Santa Clara-headquartered Intel, and comes after Altera reportedly broke off talks with Intel earlier this year.

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Altera also sells chips known as field-programmable gate arrays that customers can later configure for specific processing or data-storage functions, including for use in cellular base stations and switching systems.

Altera Corp. stockholders will receive $54 per share, an 11 percent premium to the San Jose, California, company’s closing price of $48.85 on Friday.

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Altera will become a unit of Intel. Its stock rose more than 6 percent Monday. The boards of both companies approved the acquisition.