Intel pays $650m for Axxia network chip business

Intel buys Axxia and to help it capture a slice of the $16bn market for wireless access chips.

Intel has scooped up the LSI Axxia networking chip business from Avago Technologies for $650m in cash.

Intel announced the acquisition on Wednesday, which sees it acquire Axxia Networking Business' ARM and PowerPC-based processors destined for enterprise and wireless network hardware.

Intel is still highly dependent on the uncertain PC market and has struggled to gain traction in mobile, while its other core units serving the enterprise, such as the datacentre and Internet of Things groups, have fared markedly better.

According to Intel's Rose Schooler, the Axxia Networking Business' work on system on chip products for network infrastructure will help Intel better appeal to service providers.

"This acquisition puts us in a better position to provide a complete product portfolio for our customers and to continue to enable service providers to create networks that are more intelligent, efficient and cost-effective and to deploy new services faster," said Schooler.

Intel believes its "common architecture" for networks will appeal to operators that face challenges scaling out infrastructure to support smart cities, connected cars, and other devices expected to come online as part of the growth of the much-hyped Internet of Things.

And, according to Schooler, the wireless access component of these networks is estimated be worth around $16bn for silicon makers.

Avago, once part of HP's Agilent unit, acquired LSI last December for  $6.6bn . In May, the company also shed LSI's Accelerated Solutions Division (ASD) and Flash Components Division (FCD) to Seagate for $450m.

As noted by Reuters, Avago has been selling off chunks of its business to counter volatility in its main wireless business and focus on the fast-growing storage chip market.

The Axxia Networking Business earned $113m in 2013 and has around 650 employees. The Intel deal is expected to be completed by the end of 2014.

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