SANTA CLARA, Calif.—Intel Corp. will sell its communications and application processor business to Marvell Technology Group Ltd. for $600 million in cash or a combination of cash and Marvell stock, and assumption of some debt, the two companies announced today. Intel and Marvell are both based in Santa Clara, Calif.
The sale—rumored since Intel’s Chief Executive Officer Paul Otellini in April announced a 90-day review of his firm’s operations after disappointing first-quarter financial results—reflects Intel’s unsuccessful efforts to expand its business beyond the flattening market for personal computers and network servers, in which it long led the market for microprocessors. Intel invested billions of dollars in acquisitions to diversify during the dotcom boom of the late 1990s.
Marvell will move into the market for chips for smart phones and PDAs, while Intel will refocus on its core competencies, including low-power processors for PCs and emerging technologies for mobile computing, including Wi-Fi and WiMAX broadband wireless technologies.
The deal transfers ownership of Intel’s XScale technologies, which include chips for Research In Motion’s BlackBerry 8700, the Palm Treo and the Motorola Inc. Q, among other devices. Marvell intends to use the XScale technology to become a player in the cellular phone and consumer electronics market.
Intel’s communications and application processor businesses employ about 1,400 people in engineering, product testing, operations and marketing. The two companies said they expected that “the vast majority” of these employees will become Marvell employees.
After the deal closes in four to five months, Intel will continue to manufacture products that were sold to Marvell, while Marvell arranges for other manufacturing capabilities.
Marvell’s current efforts include development of storage, communications and consumer silicon solutions, and its product portfolio includes switching, transceiver, communications controller, wireless and storage solutions for communications infrastructure for enterprise, metropolitan, home and storage networking.
