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Intel Sells Handheld Chip Biz to Marvell
Staff Reporter -- Electronic News, 6/27/2006
Intel today announced it has inked a $600 million cash deal to sell its handheld devices chip business to Santa Clara, Calif.-based Marvell Technology Group Ltd.
Evidently a part of the vast restructuring plans, Intel announced in April plans to trim the fat after a lackluster Q1. The sale of Intel's communications and application processor business includes approximately 1,400 workers, the majority of which will become Marvell employees, the companies said in a statement. Intel added that the sale will allow the company to refocus its investments on its core businesses, including Intel Architecture-based processors, Wi-Fi, and WiMAX broadband wireless technologies.
The transaction is expected to close in approximately four to five months and is subject to regulatory review and other normal closing conditions.
Intel's communications and application processor business develops and sells processors for handheld devices including smart phones and personal digital assistants. The business' processors, based on Intel's XScale technology, include the Intel PXA9xx communications processor, codenamed "Hermon," which powers Research in Motion's (RIM) Blackberry 8700 device. The Intel PXA27x applications processor, codenamed "Bulverde," is used in the Palm Treo smart phone, the Motorola Q, and other devices.
"In recent years, Intel has made significant progress and won major customers with this business," Sean Maloney, executive VP and general manager of Intel's mobility group, said in the statement. "The communications and application processor segments continue to present an attractive market opportunity, and we believe this business and its assets are an optimal fit for Marvell. We have a long history of working closely with Marvell and believe it has the ability to grow the business while maintaining customer commitments."
Intel currently intends to receive the entire purchase price in cash. However, Intel has the option to take up to $100 million of the $600 million purchase price in Marvell common stock.
After the close of the transaction, Intel said it will continue manufacturing products currently sold by this business until Marvell arranges other manufacturing resources.
The impact of the sale was felt in the stock market this morning. In early trading, Marvell's shares fell $5.95, or more than 11 percent, to $45.95. For its part, Intel watched its stock tack on 21 cents, or 1.2 percent, to $18.49.
