Analysts see this as a significant step toward opening its prized manufacturing technology to customers on a larger scale, and Apple's name is now being whispered.
The move is seen as helping the world's top chipmaker offset the growing costs of developing new technology and help keep the plants running near capacity.
Intel will make Altera's programmable chips using its upcoming 14 nanometer trigate transistor technology. Sunit Rikhi, veep and general manager of Intel's custom foundry, told Mercury News that it means Intel will be a significant player in the future.
Intel has announced agreements to manufacture on behalf of Achronix Semiconductor and other small chipmakers but Altera, which is one of two leading programmable chipmakers, is potentially much larger.
It means that the outfit has crossed over the line from just being a questionable experiment to working for tier-1 customers.
Intel has decided that real men own fabs and invested heavily in them over decades.
Altera chief exec John Daane told the Mercury that Altera is the only major programmable chipmaker that will have access to Intel's plants.
The company gets access like an extra division of Intel. As soon as Chipzilla makes the technology available to its various groups to do design work, it will get the same level of tech.
Intel's manufacturing technology will give Altera's chips a several-year advantage against its rival Xilinx. However, Altera will continue to make other chips with TSMC, its long-time foundry partner.