Intel’s Comm Unit Finds a New Home

Intel’s ongoing and aggressive 90-day review of its business operations has netted its first big result.

Today, the chip giant announced it had sold its communications and applications processor business to its Santa Clara, Calif. neighbor, Marvel Technology Group for $600 million.

Marvell  gains processors for handheld devices, including smart phones and personal digital assistants including those based on Intel’s XScale technology. One of those, the Intel PXA9xx communications processor, powers Research in Motion’s (RIM) Blackberry 8700. Another, the Intel PXA27x applications processor, is used in the Palm Treo smart phone, the Motorola Q and other devices.

Intel  said the deal doesn’t prevent any of its businesses in the networking and storage market segments to continue to use ARM-based, Intel XScale processors. Those Intel businesses will be able to continue licensing chip designs directly from ARM Holdings PLC and modifying the designs for their needs.

Analysts have long expected Intel to make some kind of move to unload its communications business. Despite substantial investment, the business never performed as well as Intel expected and had become a drag on the company. Intel officials said the sale will enable the company to focus its investments on its core businesses, including high-performance, low-power Intel Architecture-based processors and emerging technologies for mobile computing, including Wi-Fi and WiMAX broadband wireless technologies.

Dr. Sehat Sutardja, Marvell’s chairman, president and CEO, said the acquisition gives Marvell “a tremendous opportunity to become a long-term leading supplier in the cell phone and consumer electronics market segments.”

Intel’s communications and application processor business includes approximately 1,400 employees involved in a variety of functions, including engineering, product testing/validation, operations and marketing. It is expected that the vast majority of these employees will become employees of Marvell.

“In recent years, Intel has made significant progress and won major customers with this business,” said Sean Maloney, executive vice president and general manager of Intel’s Mobility Group, in a statement. “We have a long history of working closely with Marvell and believe it has the ability to grow the business while maintaining customer commitments.”

After the close of the transaction, Intel intends to continue manufacturing products currently sold by this business for handheld devices and embedded applications, and to manufacture products that are being designed into upcoming devices. This arrangement is expected to continue while Marvell arranges other manufacturing resources. Intel and Marvell said they do not anticipate disruptions in the supply of these products due to this planned sale.

Intel currently intends to receive the entire purchase price in cash. However, Intel said it has the option to take up to $100 million of the $600 million purchase price in Marvell common stock.

News Around the Web