Intel sells unprofitable handheld chip unit for $600m

Semiconductor giant Intel will sell its division that makes processors for handheld gadgets to US-based Marvell Technology Group for $600 million in cash, as the world's biggest semiconductor maker focuses on its main business of supplying chips for PCs and computer servers, an Associated Press report said.

Intel started making chips for cellphones and other handhelds in the late 1990s, the report said, but it was never able to overtake entrenched competitors such as Texas Instruments and Qualcomm, whose long-standing relationships with mobile phone makers in many ways resembled Intel's dominance among PC makers.

The report further said that although Intel did not break out the performance of the division, analysts said it remained unprofitable as Intel overestimated its ability to break into a business that was outside its core competence.

"Intel has banged their head against this wall for "&brkbar; years," Linley Gwennap, an analyst with the Linley Group, a research firm, was quoted as saying. "At this point, they're finally saying: 'Hey, my head hurts.'"

Terry Daniels, an analyst with Edward Jones, said the deal was part of a plan for Intel to redesign its microprocessors and related products every two years, instead of every five years as it had been doing, the Associated Press report said.