Intel to sell smartphone chipset division

Intel is cutting the cord on its emerging mobile processor business, announcing today it is selling its communications division--which produces the XScale processor--to new market entrant Marvell for $600 million.

The XScale processor is targeted at smartphones and wirelessly connected PDAs, and Intel has been gaining market share in the still-growing handset segment, landing deals with RIM, Palm, Motorola and other high-end phone makers. Intel, however, today said it would focus on its core PC and mobile computing business. Facing competitive pressures on the PC side from companies like Advanced Micro Devices, which has no communications or mobile products, Intel appears to be streamlining its core silicon portfolio.

“The communications and applications processor segments continue to present an attractive market opportunity, and we believe this business and its assets are an optimal fit for Marvell,” Intel Mobility Group General Manager Sean Maloney said in a statement.

Marvell will gain its first mobile handset presence from the deal, though it currently makes chips for the communications server and infrastructure space. The company will buy the Intel communications and applications business for $600 million and assume the unit’s debt. It is expected to keep most of unit’s 1400 employees on staff.

Though it is selling the division, Intel hinted that it wouldn’t be leaving the mobile handset space entirely. Intel said it would continue to focus on its mobile computing efforts, which include its Wi-Fi technology--powering the incredibly successful Centrino line--and its new WiMAX product development. Intel also said the division’s sale doesn’t include all intellectual property rights to the XScale name and technology. It said its networking and storage businesses will continue to license chip designs from ARM Holdings, the silicon engineering firm that owns the patents on the wafer process that forms the foundation of most of Intel and other chipmakers' silicon designs.