Intel has agreed to buy Avago Technologies' Axxia networking business for $650 million.
The all-cash deal, which has been approved by the boards of directors for both Avago and Intel, is expected to close in the fourth quarter of this year, subject to regulatory approvals.
The unit, which made 113 million in revenues last year and employs 650 people, will help Intel in its bid to provide processors to service providers building more intelligent networks. The firm makes systems-on-a-chip (SOCs) for networking infrastructure.
"With this acquisition, Intel gains a compelling product line and talented team to continue to deliver on this long-term vision," said Rose Schooler, vice president of Intel's data centre group, in a blog post.
She added that the opportunity was "significant and wireless access is a critical component of the mobile network, which is part of a growing network market segment estimated to represent a $16 billion silicon market segment".
Intel already supplies the vast majority of processors in PCs and servers and is looking now to bolster its share in markets such as networking, the Internet of Things and mobile devices. With the latter, Intel has been caught on the hop by the likes of ARM. Such a move would help Intel decrease its reliance on an uncertain x86 market.
"In the same way that Intel helped to transform the data centre into a business enabler, Intel can help transform networking by providing new technologies and a portfolio of solutions that allow for new innovative services and efficient scaling of a more flexible, cost effective network infrastructure," said Schooler.
Axxia was part of LSI, which Avago acquired for $6.6 billion in May. That month, Seagate signed a definitive agreement with Avago to buy LSI's flash storage business for $450 million.
