Intersil Sells Wireless Unit

Yesterday we shared rumors that Intersil was selling off its wireless chip unit. Today, the press is confirming that Intersil has sold its WLAN chip business to GlobeSpan/Virata, a maker of DSL and other networking chips. The deal comes as the market is preparing to evolve from the 802.11b chips, where Intersil dominated with almost half the market share, to 802.11g. The underlying reason for the sale seems not to be the need for cash. The WLAN group at Intersil is profitable, but profits margins are lower in the WLAN unit than in the company's core division of analog controllers (ex: for controlling laser emissions in CD and DVD players). One would also expect the WLAN units profit margins to grow narrower as more chipmakers enter the fray for all a,b, and g WiFi standards. It looks like Intersil got a boatload of cash for the deal, and Globespan/Virata gained an experienced WLAN division which is expected to have synergies with their core communications chip business.

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