Intel to pay $650M to buy LSI networking business from Avago

The Axxia Networking Business came to Avago Technologies from its May acquisition of LSI

Intel has agreed to acquire for $650 million in cash a networking business and related assets from Avago Technologies, the companies said Wednesday.

The acquisition will boost Intel's strategy for transforming wireless access into an intelligent, flexible network based on standard building blocks, wrote Rose Schooler, general manager of the Communications Infrastructure Division within the Intel Intelligent Systems Group, in a blog post.

Avago, a vendor of analog semiconductor devices, is divesting to Intel the Axxia Networking Business of LSI, which it acquired in May.

The transaction has been approved by the boards of both companies, and is expected to close in the fourth quarter of this year after receiving government approvals and meeting customary closing conditions.

Intel which already supplies the majority of chips in servers and PCs is now looking to boost its presence in other markets like mobile devices and networking.

"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," Schooler wrote.

The Axxia Networking Business, which builds systems-on-a-chip (SOCs) for networking infrastructure, generated revenue of $113 million in 2013 and employs around 650 people. It is expected to help Intel address the requirement of operators to expand networks to support the Internet of Things, a moniker for the vast proliferation of small networked devices in homes, smart cities and cars.

Avago said in May it had acquired LSI for $6.6 billion. It has since then divested some of its assets. Seagate said later in the month it had signed a definitive agreement with Avago to acquire the flash storage business of LSI, with an eye on its Enterprise PCIe (PCI Express) flash and SSD (solid-state drive) controller capabilities.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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