Intel Sells Off Telco Carrier, Network Server Division to German Computer Maker

Intel is selling off its carrier-grade and network server business to a German company that specializes in creating embedded systems and other products for the telecommunications industry, the two companies announced Oct. 6.

In a statement, Intel announced that it had sold the division, which makes carrier-grade and IP network security systems to Kontron AG, a German company that specializes in embedded products. While neither company released the financial specifics of the deal, the acquisition is expected to close well before the end of 2008.

Intel has about 70 employees working within these two businesses, which are located in South Carolina and Malaysia. All of the employees are expected to join Kontron when the deal with Intel is complete, according to the statement.

Since the beginning of 2008, Intel has been spinning or selling off various pieces of the company that are no longer part of the company’s microprocessor business or related to up-and-coming businesses such as NAND flash memory. In the first quarter of 2008, Intel sold off its optical platform division.

Then, Intel spun off its underperforming NOR flash memory business. Along with STMicroelectronics, Intel formed a new venture called Numonyx. Although Intel retains a major stake in the new company, it meant that Intel cut some 2,500 jobs from its payroll.

The move by Intel also comes at a time when stock markets worldwide are facing a financial crisis stemming from problems on Wall Street and the credit crunch in the United States. Intel is expected to release its third-quarter financial results on Oct. 15, although this acquisition is not likely to have an impact on that report. Advanced Micro Devices, the world’s other large supplier of x86 processors for servers and PCs, will report its own results Oct. 16.

While not the most visible part of Intel’s overall operations, the chip giant’s telecommunication division made a number of 1U (1.75-inch) and 2U (3.5-inch) carrier-grade systems that took advantage of embedded Intel processors. Kontron plans to roll some of those technologies that Intel developed into its line of AdvancedTCA and MicroTCA systems. Kontron also plans to continue to use Intel-embedded processors, such as the newer quad-core Xeon chips, with these systems.

Kontron also has similar plans for Intel’s IP security server systems and the company plans to use these technologies for a range of offerings including video on demand and IPTV (IP television).