Intel to buy Avago Technologies’ networking business for $650 million

Intel has agreed to a $650-million cash acquisition of Avago Technologies' networking business and related assets the companies said yesterday.

In a blog post Rose Schooler, general manager of the communications infrastructure division within the Intel Intelligent Systems Group, said the acquisition would boost the company's strategy for transforming wireless access into an intelligent, flexible network based on standard building blocks.

Avago, which supplies analog semiconductor devices, is divesting the Axxia Networking Business of LSI, which it had acquired in May, the chip maker.

The boards of both companies had approved the transaction, which is expected to close in the fourth quarter.

Analysts say Intel, which is a supplier of the majority of chips in servers and PCs, is now eyeing other growth 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.

Avago's Axxia business mainly deals with networking and infrastructure products for wireless networks and enterprise gateways.

Avago acquired LSI last December for $6.6 billion, and had been divesting units as it sought to counter volatility in its main wireless business and focus on the fast-growing storage chip market.

The company, which designs and develops analog semiconductors was, at one time, a part of Hewlett-Packard Co. It had said in May, that it would sell LSI's flash storage business to hard drive maker Seagate Technology Plc for $450 million in cash.