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Intel to Buy Avago Network Chip Business for $650 Million

The deal is the latest move by Intel to grow its networking business, a key part of the vendor's effort to extend its reach in the data center.


Intel is adding to its networking efforts by buying LSI's Axxia networking business from Avago Technologies for $650 million.

The deal, announced Aug. 13, comes three month after Avago, which makes analog semiconductor devices, completed its acquisition LSI for $6.6 billion. Avago bought LSI to boost its presence in the storage chip space and is divesting LSI's Axxia networking business.

The Axxia networking unit generated $113 million in revenues during 2013 and comes with about 650 employees. The deal with Intel has been approved by the boards of both companies and is expected to close in the fourth quarter.

The move comes as Intel continues to expand its reach in the data center beyond its core business of selling processors for PCs and servers. Company officials see significant growth opportunities for its x86-based products in such areas as mobile devices and storage, as well as networking.

Over the past few years, the chip maker has bulked up its networking capabilities through acquisitions of such vendors as software maker Aepona, the wireless division of Infineon Technologies, for $1.4 billion; the interconnect assets from supercomputer maker Cray; Ethernet switch chip designer Fulcrum Systems and the wireless infrastructure unit of Mindspeed Technologies.

Intel last year also invested $6.5 million in software-defined networking (SDN) vendor Big Switch Networks.

In a blog post, Rose Schooler, general manager of Intel's Communications Infrastructure Division, wrote that the move will help Intel compete in the $16 billion wireless access silicon space, an important market as system and device makers look to put more intelligence and connectivity into their products as part of the growing Internet of things.

"This acquisition puts us in a better position to provide a complete product portfolio for our customers and to continue to enable service providers to create networks that are more intelligent, efficient and cost-effective and to deploy new services faster," Schooler wrote. "In the same way that Intel helped to transform the data center 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."

The Axxia sale to Intel is part of a larger effort by Avago to divest itself from some of LSI's businesses—Seagate in May announced it was buying LSI's flash storage business from Avago for $450 million.