Intel just bought a small startup for $350 million

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Intel CEO Brian Krzanich

Reuters/Albert Gea

Intel CEO Brian Krzanich

Intel just bought a two-year old machine learning startup called Nervana Systems, a move aimed at expanding its data center business.

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Intel declined to share the financial details of the deal, but Recode reports it paid "at least $350 million," citing an anonymous source.

That's a steep price for a 48-person company. But given Nervana's top notch technology and leadership team, led by former Qualcomm researcher Naveen Rao, it's a move that will likely help Intel bolster its already dominant position in the data center market.

Intel has been desperately trying to shift its focus away from the shrinking PC chip business lately, and put a lot more emphasis on growing its data center and Internet of Things units.

In particular, as more devices get connected to the internet, it will create a whole lot more data, which will have to be processed through data centers. Intel provides over 90% of the chips powering today's data centers and having Nervana's technology to make better sense out of the data will only boost its service offerings.

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"Their IP and expertise in accelerating deep learning algorithms will expand Intel's capabilities in the field of AI," Diane Bryant, the head of Intel's data center business, wrote in a blog post.

That's particularly important for Intel because its data center business has been slowing down, not showing the type of robust growth Wall Street has been expecting in recent quarters.

This is also one of the first big acquisitions Intel's made after bringing in Venkata "Murthy" Renduchintala as its No. 2 guy. Renduchintala played up the potential of machine learning and artificial intelligence in a recent blog post explaining his move to Intel.

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