AMD sells handheld chip unit to Qualcomm

[dhilipkumar]

AMD sells handheld chip unit to Qualcomm
Chip maker says deal will let it focus on x86 processors and high-end graphics chips

Advanced Micro Devices Inc. has sold its handheld chip division to Qualcomm Inc., which is looking to use the acquired technologies to boost the multimedia capabilities of telephone handsets.

The $65 million deal, which was completed on Monday and has already received regulatory approval, will also help AMD focus on its core businesses of making x86 processors and high-end graphics chips, according to a joint announcement by the two companies.

Qualcomm bought graphics and technology assets, intellectual property and other resources from AMD, and it has offered to hire chip design and development teams that were working on 2-D and 3-D graphics, display, audio and video projects at AMD. Qualcomm said it plans to integrate AMD-developed multimedia technology into its system-on-chip products.

AMD has been struggling to compete against its much larger processor rival, Intel Corp. Last October, AMD announced a deal to spin off its foundry business as a separate company. And on Friday, the chip maker said it would eliminate another 1,100 jobs and cut salaries in order to reduce costs.

Qualcomm makes chips and licenses technology for a wide range of mobile handsets. It has also been pushing mobile multimedia through its MediaFLO unit, which builds broadcasting systems for delivering digital TV to cell phones.

The value of the acquisition could change because of adjustments for employee-related expenses. Qualcomm expects the deal to dilute its pro forma earnings per share by 2 cents in the company's 2009 fiscal year, which ends in September, and then begin to generate earnings in the second half of fiscal 2010.