The handset chip business continues to consolidate, with US semiconductor firm LSI selling its mobility group to Infineon Technologies for $450 million.
LSI, which merged with Agere Systems in April, said it would focus on networks and storage.
LSI said it did not have the scale to continue in the business, which is highly capital-intensive and dominated by a handful of players.
"Infineon's strong commitment to the mobility market will ensure our customers have access to a stronger supplier and a broader portfolio of solutions to address their needs," said CEO Abhi Talwalkar.
The move follows the announcement last week by Nokia, which has a third of the world's mobile phone market, that it would outsource all of its chip manufacturing to Infineon, Texas Instruments, Broadcom and STMicroelectronics.
"The sale of our mobility business will allow us to further focus our efforts on attractive market opportunities in storage and networking, where we have a strong presence, significant differentiation and the scale needed to be successful over the long term," Talwalkar said.
Some 700 LSI employees will join Infineon, the two companies said in a statement.