Applied Micro to buy IBM chip assets

NEW YORK: Applied Micro Circuits Corp. has agreed to license intellectual property and buy part of a line of microchips from IBM Corp. for $227 million in cash.

Applied Micro Circuits expects the acquisition of the assets associated with IBM PowerPC 400 product line to close during the current quarter.

The company, based in San Diego, California, expects the deal to add to its future earnings, excluding items, and to result in acquisition-related charges.

Armonk, New York-based IBM will continue to make the chips for Applied Micro Circuits, which sells microchips largely for the communications industry.

IBM last month announced plans to begin opening up the core technology of its processors to outsiders as it tries to broaden its chips business, which has been losing money. It said the move was partly designed to increase collaboration regarding chip design.

It has also signed chip deals with Sony Corp. and L-3 Communications Holdings Inc.

© Reuters