Intel Extends Reach in Communications Market

Intel announced Wednesday that it is expanding into the lucrative high-speed communications market by acquiring chip designer GIGA A/S, part of NKT holdings, for $1.25 billion in cash. Copenhagen-based GIGA makes chips used in the optical networking and communications products that direct traffic across the Internet and corporate networks. The Danish company is the only supplier shipping OC-192 (10 gigabits/second) products in volume to telecommunications and data communications customers.

Intel has been on a buying spree, gobbling up 14 companies over the last year or so. The acquisitions are intended to further Intel's strategy of evolving from a microprocessor designer and manufacturer into a diversified semiconductor company. The GIGA acquisition should help Intel compete with communications integrated circuit (IC) companies like PMC-Sierra and Applied Micro Circuits (AMCC). The deal offers GIGA, a company strong in Europe but with little presence in the U.S., a chance to move into the North American market.

In a press conference following the announcement, Mark Christensen, vice president and general manager of Intel Network Communications Group, said the acquisition furthers Intel's long-term strategy of becoming the "predominant building block supplier to the worldwide Internet economy" and complements the company's purchase of Level One Communications last August. "With the optical communications market emerging as a critical element of the Internet and with the increase in Internet users and the arrival of DSL and cable, there's explosive demand for fiberoptic into the central office and the backbone, and increasingly into the home," Christiansen added. "GIGA is at the leading edge of high-speed optical networking."