Qualcomm has acquired the mobile multimedia assets of struggling chipmaker AMD for $65 million, the companies announced Monday.
After the announcement, shares of San Diego-based Qualcomm fell $1.01, or 2.8 percent, to $35.01, while AMD skidded $.17, or 7.4 percent, to $2.12.
The deal signals a retreat from the mobile arena by Intel rival AMD. Last week, AMD said it would cut 1,100 jobs and take a fresh $622 million goodwill charge related to its acquisition of ATI Technologies in 2006. All told, the write-offs related to that $5.4 billion deal total $3.17 billion.
In November, Qualcomm, which develops chips and other technology for wireless devices, said it would halt development of Ultra Mobile Broadband network technology and focus on Long Term Evolution, which is seen as an emerging rival to the WiMax network being rolled out by Clearwire and its partners.
"This acquisition of assets from AMD's handheld business brings us strong multimedia technologies, including graphics cores that we have been licensing for several years," Steve Mollenkopf, executive vice president of Qualcomm, said in a statement. "Bringing this technology in-house creates even greater synergy as we seamlessly integrate the best-in-class multimedia performance AMD offers into our system-on-chip products."
In the same news release, Robert Rivet, chief financial officer of AMD, said the deal would allow the company to “focus on our core business.” The deal comes as No. 1 chipmaker Intel is pushing aggressively into wireless devices, including smartphones.
Qualcomm expects the deal to cost it about $0.02 in pro forma earnings per share in fiscal 2009 and add to earnings by the second half of calendar 2010.
In announcing the layoffs last week, AMD said it would suspend its 401(k) match for employees and cut the base salary of Hector Ruiz, executive chairman, and Dirk Meyer, chief executive.
In response to its financial woes, AMD plans spin off its chip fabrication facilities and form a joint venture with two Abu Dhabi companies, the Advanced Technology Investment Co. and the Mubadala Development Co.