Qualcomm acquires AMD’s handheld business for $65 million

Chipmaker AMD on Tuesday said it has sold the core of its Imageon mobile graphics business to Qualcomm for roughly $65 million in cash.

The deal gives the chip design company the intellectual property rights, the option of hiring related AMD workers, and other resources to Qualcomm and effectively puts AMD out of the handheld video category, leaving it free to focus on desktop and notebook graphics for its Radeon line.

Qualcomm describes the buyout of the mobile graphics division as a step towards improving its system-on-chip line, which powers many cellphones and handhelds and should improve significantly in 2D and 3D performance once AMD's technology is integrated into its hardware.

Qualcomm builds both the cores 3G and eventually 4G cellphones and also targets netbook-level performance with its Snapdragon processors.

Qualcomm's cash payment to Advanced Micro Devices is subject to adjustments for worker-related expenses and other items. Qualcomm expects the acquisition to be about 2 cents dilutive to pro forma 2009 earnings per share and accretive to earnings by the second half of calendar year 2010.

"This acquisition of assets from Advanced Micro Devices' 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 and president of Qualcomm CDMA Technologies, said in a statement.

AMD interprets the sell-off as an opportunity to center its attention on its most successful businesses and is allowing the partial acquisition just days after it said it would cut 1,100 jobs or 9 per cent of its workforce to turn around the company's sinking fortunes.

The company continues to struggle against Intel in the computer market and is only now releasing more competitive processors such as the Phenom II even as its Radeon HD line is performing well.