Contact: Scott Denne John Abbott
Intel is bolstering its network processor offerings and system-on-a-chip capabilities through the acquisition of LSI’s Axxia networking business. Intel will pay $650m in cash for the unit, which Avago Technologies obtained via the recently closed purchase of LSI.
This is Avago’s second divestiture of a piece of its LSI portfolio – transactions that make its initial deal more compelling. Through this sale and an earlier unloading of LSI’s storage business, Avago has paid back $1.1bn of the $6.6bn it shelled out while only losing about one-tenth of the target’s $2.37bn in 2013 revenue.
The move by Intel adds to the growing portfolio of infrastructure silicon and software that the company has been assembling over the past few years. Intel exited the mobile application processor business in June 2006 via the sale of its ARM-based PXA line to Marvell for $600, and followed that deal by licensing its IXP network processor to startup Netronome. Then, in August 2010, Intel renewed its interest in the networking sector, buying Infineon Technologies’ wireless modem business for $1.4bn, followed a year later by the purchase of Fulcrum Microsystems and, in December, the pickup of MindSpeed Technologies’ wireless assets.
We’ll have a more in-depth report on Intel’s Axxia acquisition in tomorrow’s 451 Market Insight.
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