Marvell Technology Group (Nasdaq: MRVL) and Intel Corp. (Nasdaq: INTC) today announced that Marvell is acquiring Intel’s communications and application processor business for $600 million in cash, plus the assumption by Marvell of certain liabilities. Intel has an option to take up to $100 million of the $600 million purchase price in Marvell shares. The deal is expected to be closed within 4-5 months.
Intel's communications and application processor business develops and sells processors for handheld devices including smart phones and personal digital assistants, based on XScale technology. One of these processors is the PXA9xx communications processor, codenamed "Hermon," which powers Research in Motion Inc.'s (Nasdaq:RIMM; TSX:RIM) Blackberry.
Most of Intel’s communications and application processor business is based on Israel’s DSP Communications (DSPC), acquired for $1.6 billion in 1999. Founded by Davidi Gilo, DSPC develops digital signal processors for wireless and cellular devices.
Intel has suffered heavy losses from its communications processors business in recent years. In 2004, the last year it separately reported results by different business units, Intel’s communications unit lost $800 million on $5 billion revenue. Altogether, Intel spent $10 billion on communications activity during the bubble years of 1999-2000.
Intel communications units have 1,400 employees worldwide, of whom 500 are in Israel.
Marvell develops communications and storage solutions, mostly for communications infrastructures. This is the company’s third acquisition in Israel. It acquired Galileo Technology in 2000 for $2.7 billion in shares, and RadLAN in 2003 for $160 million in cash and shares. Following the present deal, the company will have four centers in Israel: in Yokne’am, Lod, Ramat Hahayal in Tel Aviv, and now in Petah Tikva.
Intel VP mobile platforms group David Perlmutter told “Globes” today, “Intel bought the products in order to enter the cellular and hand-held devices communications sectors, but we did not succeed.”
As for the price of the deal, he said, “It’s hard to compare the prices during the gay bubble years with the current prices. There are other aspects as well. No price paid in 1999 is valid today.”
Published by Globes [online], Israel business news - www.globes.co.il - on June 27, 2006
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