Intel has been interested in buying Altera for some time, although its attempts to snap it up earlier this year came to nothing.
That led observers to speculate that Intel could launch a hostile bid for Altera.
But now, according to the New York Post, the two sides are sitting around the table in further discussions. The deal could mean Intel will buy Altera for as much as $13 billion.
Cash rich Intel wants Altera to fill a hole in its semiconductor line. Intel is seeing demand for its X86 microprocessors wane with the rise of smartphones and tablets, while Altera makes progrmmable chips that could play a part in the burgeoning automotive electronics industry.