Intel to sell XScale business to Marvell

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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