Intel Communications Unit – Unofficially on the block

The San Jose Mercury News picks up on ‘several unnamed sources’ who confirm what we predicted weeks ago – that Intel (INTC) is selling their communication semicondustor business.

Read my original post, from April 29.

From the San Jose Mercury News:

The groups for sale include:

• Intel’s communications processor business, including the IXP network processor and communications processor families for communications gear. That business generated approximately $150 million in revenue for 2005, according to sources who have seen documents describing the business.

• Intel’s Xscale business, which includes applications processors for cell phones and chips for BlackBerrys, smart cell phones, handheld computers and portable media players. That business generated approximately $250 million in sales last year, according to sources who saw documents on the business.

Both the communications processor and applications processor businesses, which are being shopped as a single group, are losing money. Intel can get a tax write-off for selling the businesses.

Other Intel communications businesses are also for sale, for the right price, according to industry sources.

I would confidently speculate that other unit would be their optical components business, which just happens to be the #1 provider of 10GE modules to Cisco. Would not be surprised to see Finisar (FNSR) pick that up.

The communication processor business is simply too big and diverse for one company to digest. Regardless of what happens initially, the component pieces of that business will eventually find homes in a wide range of specialty semiconductor companies.

Hat Tip to the Most Excellent Barrons Tech Trader Daily blog.

Companies Mentioned:
Finisar Corp (FNSR)
Intel Corp (INTC)