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Intel says it wants to focus on other areas of its business

Intel announced today that it will be selling its Communications and Applications Processor business over to Marvell for $600M USD. The business unit at Intel is credited with developing such processors as Intel's XScale series of mobile processors including the PXA9xx family used in RIM's Blackberry 8700 as well as other processors that are used in a wide variety of handhelds. "In recent years, Intel has made significant progress and won major customers with this business," said Sean Maloney, Intel's executive vice president and general manager of the Mobility Group.

Both Marvell and Intel say that while the transaction will take roughly four months to complete, customers should not expect any delays or supply problems during or after this time. Intel will continue to manufacture the products until Marvell can find a suitable manufacturer. Intel's Communications and Applications Processor business holds roughly 1,400 employees and has been a very successful operation for Intel over the last several years. Its products have been used in many handhelds from ASUS, Dell, HP, Motorola, HTC, Palm, among others.

According to Intel's press release "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. Upon closing, Marvell may record a one-time charge for purchased in-process research and development expenses."

2006 has been a year of restructuring for Intel. The company made several announcements this year about the reorganization of its memory business. Intel told the press that its NOR memory technology was under examination but promised no layoffs. Intel also announced a deal earlier in the year to jointly develop NAND flash memory with Micron and launched a joint venture called IM Flash Technologies LLC. Intel says that the deal with Marvell will not impact other business areas that focus on the mobile market. Some of Intel's other products use ARM-based technology that Intel previously licensed and the company reassures customers that interruptions will not occur.

The company also states "This planned sale does not impact the ability of other Intel 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."

Interestingly, earlier this month AMD made a similar announcement to spin off its Alchemy division which produces processors for the hand held market. AMD's Alchemy processors are MIPS based and the division was transferred to Raza Microelectronics.




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