Intel buying Avago network processor unit for $650M

|About: Intel Corporation (INTC)|By:, SA News Editor

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.