Intel Corporation (NASDAQ:INTC) furthered its aim of becoming a global leader in network infrastructure solutions by purchasing the Axxia Networking Business from Avago Technologies Ltd (NASDAQ:AVGO). The $650 million cash purchase nets Intel Corporation (NASDAQ:INTC) the networking business of former Silicon Valley company LSI Corp, which Avago purchased in May for $6.6 billion.
It’s not the first such move by Avago to spin off some of LSI’s assets; the Singapore-based company agreed shortly after purchasing LSI to sell the flash business of that company to Seagate Technology PLC (NASDAQ:STX) for $450 million.
For Intel Corporation (NASDAQ:INTC), the purchase nets them a division that had $113 million in revenue in 2013, and employs about 650 people. As Rose Schooler, vice president of Intel Corporation (NASDAQ:INTC)’s data center group and general manager of its communications and storage infrastructure group said in a blog post on the purchase, it lands them a product line that integrates well with their networking ambitions.
“The Axxia Networking Business is a leader in SoC (system on a chip) solutions for network infrastructure. This acquisition puts us in a better position to provide a complete product portfolio for our customers and to continue to enable service providers to create networks that are more intelligent, efficient and cost-effective and to deploy new services faster. “
As Schooler later pointed out, networking infrastructure is only going to become more and more important in the dawning Internet of Things era, which is seeing explosive growth as everything from TV’s and cars, to toasters and smart meters become interconnected in various ways. Managing the demands on network infrastructure from the rapidly expanding number of users and smart devices is a challenge that Intel Corporation (NASDAQ:INTC) believes they can help operators tackle, and clearly aim to be a leader in. It’s estimated the mobile network industry will be a $16 billion market within a few years’ time.