Intel buying Avago network processor unit for $650M


Intel (NASDAQ:INTC) is buying Avago's (NASDAQ:AVGO) Axxia network processor unit for $650M in cash. The deal is expected to close in Q4.

The unit was obtained by Avago through the LSI merger. It had 2013 revenue of $113M, and employs 650 people.

The acquisition broadens Intel's product line within a competitive network processor market that also features Broadcom, Marvell, Cavium, and Freescale, among others.

The chip giant bought Ethernet switch processor startup Fulcrum Microsystems in 2011, and (thanks to the Fulcrum deal) counts data center switch vendor Arista Networks among its clients. The adoption of software-defined networking (SDN - shifts network intelligence to software-based controllers)  is expected to boost demand for off-the-shelf silicon relative to proprietary ASICs.

Notably, the Axxia line relies on ARM and IBM PowerPC CPU cores rather than x86 cores. However, the processors are often used in PCIe cards within servers running Intel x86 CPUs.

Back in May, Avago agreed to sell LSI's flash product unit to Seagate for $450M.

From other sites
Comments (14)
  • Philip Marlowe
    , contributor
    Comments (1513) | Send Message
     
    At 6 times sales this likes a pretty good deal for avago. Avago bought LSI for less than 3 times revenues. I know it is probably not all translatable, and perhaps some businesses are more valuable than others, but still -- it looks like a good deal.
    13 Aug 2014, 06:18 PM Reply Like
  • Retired Securities Attorney
    , contributor
    Comments (3978) | Send Message
     
    Very interesting.
    13 Aug 2014, 06:18 PM Reply Like
  • techy46
    , contributor
    Comments (11021) | Send Message
     
    Intel's obviously looking to get into SDN silicon is a bigger way.
    13 Aug 2014, 06:33 PM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    It would seem to be so, Techy. I, for one, am glad to see a continued push into different markets. Hopefully it will both lead to better designs on future chips and provide a boost to the bottom line growth.
    14 Aug 2014, 07:39 AM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    It would seem to be so, Techy. I, for one, am glad to see a continued push into different markets. Hopefully it will both lead to better designs on future chips and provide a boost to the bottom line growth.
    14 Aug 2014, 07:39 AM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    It would seem to be so, Techy. I, for one, am glad to see a continued push into different markets. Hopefully it will both lead to better designs on future chips and provide a boost to the bottom line growth.
    14 Aug 2014, 07:39 AM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    I would agree with Techy on this. I am glad to see a continued push into different markets. Hopefully it will both lead to better designs on future chips and provide a boost to the bottom line growth.
    14 Aug 2014, 07:40 AM Reply Like
  • Bruce24
    , contributor
    Comments (306) | Send Message
     
    The Axxia network processors are ARM based.
    13 Aug 2014, 06:53 PM Reply Like
  • txbadonetoo
    , contributor
    Comments (780) | Send Message
     
    So it looks as if INTC just beefed up it's exposure to the Data Center market as well as beefing up it's ARM based expertise to compliment it's x86 processor offerings. I see expanded data center revenue with this acquisition.
    13 Aug 2014, 07:03 PM Reply Like
  • Tim'S
    , contributor
    Comments (375) | Send Message
     
    Me too.
    13 Aug 2014, 08:11 PM Reply Like
  • 7of9
    , contributor
    Comments (469) | Send Message
     
    Cheaper to buy ARM based SoC than to build one in house based on Atom? Guess is was a time to market premium plus aqu-hire move... Still bit too pricey thanks to the Fed induced over valuation market of late...
    13 Aug 2014, 10:13 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (6187) | Send Message
     
    They're buying it for the IP, not the hardware. The goal is to virtualize network processing and move it onto Intel architecture.

     

    http://intel.ly/1pPzAO7
    14 Aug 2014, 11:46 AM Reply Like
  • Retired Securities Attorney
    , contributor
    Comments (3978) | Send Message
     
    Cincy,

     

    That's what I thought based on Intel's universal past practice.
    14 Aug 2014, 12:33 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13052) | Send Message
     
    It seems more like a way to take a competitor off the market than a strong bet on their technology. I don't see Intel changing its colors at all.
    13 Aug 2014, 11:47 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs