AMD sells handheld chip unit to Qualcomm

Qualcomm has acquired Advanced Micro Devices' handheld chip division for about $65 million, looking to bring greater multimedia capabilities to handsets based on its chips.

The deal, which closed Monday and has already received regulatory approval, will help AMD focus on its core businesses of making x86 CPUs and high-end multimedia chips, according to a joint press release by the companies.

Qualcomm bought graphics and technology assets, intellectual property and other resources from AMD, and will offer to hire design and development teams from the company, they said. The teams are working on 2-D and 3-D graphics, display, audio and video products. Qualcomm said it would integrate AMD multimedia technology into its system-on-chip products.

AMD has been struggling against its much larger rival, Intel, and last October spun off its foundry business as a separate company. On Monday, the company said it would eliminate 1,100 more employees and cut salaries in order to remain competitive.

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 $0.02 in its 2009 fiscal year, which will end in September, and begin to add to its earnings in the second half of its 2010 fiscal year.

The IDG News Service is a Network World affiliate.