Intel: An Excellent Development.

Dec.19.13 | About: Intel Corporation (INTC)

On Dec 16, 2013, Intel (NASDAQ:INTC) announced that it has signed a definitive agreement to acquire certain assets of the wireless infrastructure division of Mindspeed Technologies, Inc (NASDAQ:MSPD).

Assets: (source: Annual Report Mindspeed)

Mindspeed's wireless infrastructure division assets include signal processing-related technologies and IP for base stations. Its wireless infrastructure products include ultra-low-power, multi-core digital signal processor [DSP] system-on-chip (SoC) products for the mobile (3G/4G) carrier infrastructure, including residential and enterprise platforms.

  • Offerings:

Its SoC products are designed to address the base station diversity and computational complexity caused due to transformation of a mobile network from a voice-centric to data-centric network and delivers highly integrated baseband solutions with multi-core digital signal processing. Its SoC products enable the development of a wide range of equipment, from residential small cells to picocells and enterprise femtocells serving a relatively small number of subscribers to microcells and macrocells serving hundreds or thousands of subscribers.

The division offers solutions for 3G, LTE, and dual-mode, which incorporates both 3G and 4G functionality into a single solution. Its most advanced products include dual-mode solutions with both HSPA and LTE in one device. The key features of the division's products include:

  • Low power consumption.
  • Multiple offerings to meet customer specific needs (3G, 4G, and multimode)
  • Wide range of SoC products that can serves the diverse range of subscribers (from less than 50 to thousands of subscribers).

Small Cell Business opportunity:

The small cell market is a quickly evolving market, particularly in the countries like China where the small cell infrastructure is increasingly becoming a preferred way for service providers to serve the customers in the densely inhabited cities.

Carriers across the globe, including AT&T (NYSE:T) , Verizon (NYSE:VZ), Sprint (NYSE:S), Telefonica (NYSE:TEF), China Mobile (NYSE:CHL), Korea Telecom and SK Telecom (NYSE:SKM), have announced plans to roll out 4G/LTE and small cell networks, which showed the potential demand for small cell solutions. With the rising deployment of 3G/4G networks all around the globe, the market for the solutions is expected to rise rapidly.

Why Intel acquired the assets:

Mobile network infrastructure today includes four key processing workloads, namely application processing, control processing, packet processing and signal processing. Until now, Intel-based platforms have been delivering three of the four key processing workloads except signal processing workload. With this acquisition, the company hopes to fix the last missing link from its mobile network infrastructure architecture.

Conclusion:

The acquisition will not only allow the company to augment its existing mobile network infrastructure offerings, but also will allow it to enter the small cell solutions market. The acquisition will give the company an unmatched and most advanced IP portfolio related to the small cell solutions.

The company (in the release) only mentioned the immediate benefits of the acquisition. As mentioned in the release:

Through this acquisition, Intel will gain a wireless infrastructure team with deep experience in delivering signal processing-related technologies and IP for base stations. Having this team as part of Intel will accelerate consolidation of the final fourth workload on Intel technologies, delivering increased value to customers.

However, the company may well be preparing to increase its presence in the mobile infrastructure market by acquiring IP portfolio that will give the company an immediate insight of the most unique (TD-SCDMA), and the most advance technologies (4G-LTE) for signal processing. The company's R&D capabilities are good enough to further develop the acquired IP base to serve the market beyond small cells and data center solutions. In the future, the assets will give the company a base from where it can further develop the IP to offer products that can serve markets beyond small cell infrastructure. All in all, this is an excellent acquisition that is expected to yield rich dividends in the future.

Disclaimer: Investments in stock markets carry significant risk, stock prices can rise or fall without any understandable or fundamental reasons. Enter only if one has the appetite to take risk and heart to withstand the volatile nature of the stock markets.

This article reflects the personal views of the author about the company and one must consult its financial adviser before making any decision.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.