Intel to sell XScale business to Marvell


— 10:33 AM on June 27, 2006

Confirming rumors that popped up earlier this month, Intel has agreed to sell its communications and applications processor business to the Marvell Technology Group for a cool $600 million. The sale involves XScale, Intel's ARM-based processor technology, which is currently used in applications like cell phones, PDAs, networking equipment, and storage solutions. Intel says the sale will give Marvell a "strong presence" in the handheld device processor market, although according to the San Jose Mercury News, the move really represents an effort by Intel to ditch its money-losing businesses as part of announced restructuring plans.

Intel's "spring cleaning" initiative has already seen the company streamline its NOR flash unit, and rumors are circulating that Intel eventually plans to reduce its workforce by up to 16,000 jobs. The XScale sale takes care of 1,400 employees, Intel says, the "vast majority" of whom are expected to find jobs at Marvell. Intel won't part ways with the XScale business completely, though—once the transaction ends in four to five months, Intel plans to continue manufacturing chips for embedded and handheld solutions as well as upcoming devices until Marvell can find its own production arrangements. The terms of the transaction also give Intel the option to receive $500 million up front and take up $100 million in common stock, although the company currently intends to cash out entirely.

   
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