AMD Sells Handset Division to Qualcomm for $65 Million

Advanced Micro Devices has agreed to sell its struggling handset division to Qualcomm for $65 million, according to the chip makers. AMD plans to sell the handset division that includes graphics, multimedia and other technology. AMD inherited the ATI's handset division in 2006 and the division had underperformed since then and the losses have had a significant impact on AMD's bottom line. AMD also sold its digital television division to Broadcom in 2008.

Advanced Micro Devices has agreed to sell its struggling handset division to Qualcomm for $65 million, which should help AMD as the chip maker looks to strengthen its financial position and concentrate on its core business of processors, graphics and chip sets.

AMD and Qualcomm announced the agreement Jan. 20. The two companies did not indicate when they would finalize the deal.

The agreement means that Qualcomm will not only acquire AMD's handset division, but the company also inherits the graphics, multimedia technology and other intellectual property from the business. With the deal complete, Qualcomm plans to use that technology and intellectual property to develop new types of 2D (two-dimensional) and 3D (three-dimensional) graphics technologies for handset devices and cell phones as well as enhanced audio, video and display capabilities.

Qualcomm is also extending job offers to some of the employees that worked within AMD's handset division.

"This acquisition of assets from AMD's handheld business brings us strong multimedia technologies, including graphics cores that we have been licensing for several years," Steve Mollenkopf, executive vice president of Qualcomm and president of Qualcomm CDMA Technologies, said in a statement.

AMD originally inherited the handset business when it bought graphics maker ATI in 2006 for $5.6 billion. The handset division was original part of ATI's consumer electronics business and that division has underperformed for the last two years.

While the ATI buy was seen as a way for AMD to better compete with Intel and offer its own line of graphics and chip sets for desktops and notebooks as well as server systems, AMD has struggled with the cost of the acquisition. Last week, when AMD announced that it would eliminate 1,100 jobs, the company also announced that it plans to take a $622 million impairment charge related to the 2006 acquisition of ATI.

In 2008, AMD announced it would sell off its digital television business, which was also part of ATI's consumer electronics division, to Broadcom for $141.5 million. With the handset division now sold off, AMD plans to concentrate more on its core business of microprocessors, graphics and chip sets.

AMD also plans to spin off its manufacturing business into a new company tentatively called "The Foundry Company." This is also expected to help AMD shore up its finances and allow the company to focus on those core businesses. That deal is expected to close sometime in the first quarter of this year.