June 27, 2006 – Marvell Technology Group Ltd. has agreed to acquire Intel Corp.’s communications and applications processor business for $600 million in cash, with an option to make $100 million of that a stock exchange. Marvell also likely will record an undisclosed one-time charge for purchased in-process R&D expenses. The transaction is expected to close in approximately four to five months, subject to regulatory review.
The unit develops processors for handheld devices based on Intel’s XScale technology, including the PXA9xx “Hermon” chip for RIM’s Blackberry 8700 device, as well as the PXa27x “Bulverde” chip used in the Palm Treo smart phone, Motorola Q, and other devices. The companies said Intel would continue manufacturing products currently sold by this business, while Marvell arranges other manufacturing resources. Meanwhile, Intel said it will renew focus on its core businesses, including high-performance, low-power Intel Architecture-based processors and emerging mobile infrastructures such as Wi-Fi and WiMAX broadband wireless technologies.
Rumors had surfaced over recent weeks that Intel was seeking a buyer for two of its units: its communications processor business, including IXP network processor and other chip families for networking gear, and the XScale applications processor business. Together, the two money-losing units posted sales of roughly $400 million last year, about 4% of total company revenues.