Intel Makes Its First Acquisition Since Brian Krzanich Became CEO
Intel confirmed today that it had bought the satellite navigation chip business unit of ST-Ericsson, a joint venture operated by STMicroelectronics, the European chip maker, and Ericsson, the Swedish telecommunications equipment company. The money-losing joint venture is being wound down by its parents.
Terms aren’t being disclosed, but ST-Ericsson said the sale of the business unit, which supplies chips for GPS navigation systems and wireless phones, will reduce its annual cash needs by about $90 million. It’s pretty clear why STMicro and Ericsson are shutting the JV down: It reported an operating loss of $158 million on sales of $256 million in the first quarter of 2013. STMicro said last month that it expected to spend as much as $450 million on the company during the transition and wind-down.
This is the sort of acquisition that Intel would want to make in order to fill out its offerings in the mobile arena. Its most important acquisition in the area was the mobile chip business of the German chip outfit Infineon. It will also help Intel compete a little more completely with Qualcomm, which has pretty strong GPS assets already as part of its wider offerings in the wireless chip business.
A few days after Krzanich was named to succeed former CEO Paul Otellini, he named Mike Bell, a former Palm and Apple exec who spoke at our D: Dive Into Mobile conference in April, to head up a new mobile devices group.
It wasn’t immediately clear if the 130 people working in the unit, who are based in the U.K., India and Singapore, will report to Bell, but that’s a pretty fair assumption. Update: I just heard from an Intel spokesman who says the group will become part of the mobile chip unit run by Herman Eul, who
succeeded ran that unit with Bell.
Despite its huge lead as the world’s dominant supplier of chips for personal computers and servers, Intel has generally struggled to gain traction in the market for chips going into smartphones and tablets. Its main competitor is the British chip designer ARM and its many licensees, who include Qualcomm, Nvidia, Apple and numerous others.