Under the deal, Intel will acquire the engineering team, patents, office space and other assets of FMI, a wholly owned subsidiary of auto-parts supplier Visteon, said Ron Smith, vice president and general manager of Intel's wireless computing and communications group.
Colorado Springs, Colo.-based FMI designs mixed signal and analog processors, which are used to convert sound and other "real world" phenomena into digital data that can be interpreted by computer networks.
On Wednesday, Dearborn, Mich.-based Visteon will become independent of Ford Motor as part of a planned spinoff.
Like nearly every other company in the high-tech arena, Intel is moving rapidly to capitalize on the boom in wireless communications.
"If you look at what's in a cell phone today, it is a plethora of semiconductors," Smith said. "We have a complete portfolio to address the wireless device market."
Intel already manufactures flash memory and embedded microprocessors, two of the crucial components in cell phones. In the future, however, Intel will become more involved in manufacturing digital signal processors (DSP), which refine cellular signals, and other chips that go into handsets, base stations and other wireless equipment, he said. In the second half of the year, for example, Intel and Analog Devices will release a co-developed DSP.
Although Intel is relatively new to a number of these markets, increasing standardization will help the company gain market share, Smith said.
Currently, cell phone makers often design a number of their own chips. In the future, these devices will be used to access data networks. Because of the complexity, design cycles and standards issues, it will become easier to outsource this function and standardize on silicon from outside manufacturers.
"As the whole thing moves from voice to data and the Internet, Intel can bring a lot to the party," he said. Eventually, many of these chips will be integrated into one to cut costs, he added.
Intel has been on an acquisition rampage. Since January 1999, the company has closed on 20 acquisitions and spent more than $6 billion in the process.
Most acquisitions so far have been in the networking and communications divisions. Intel formed its wireless group last December. The group oversees production of flash memory, embedded processors such as the StrongArm chip, and the development of several product lines, such as digital signal processors, that Intel is just entering.
Today's acquisition is the third for the group, counting the acquisition of the StrongArm division from Digital in 1998.
Although Intel will acquire most of FMI's assets, the deal technically won't be a complete acquisition. Visteon, which absorbs all of FMI's output, will keep the FMI name and the rights to the current product line, Smith said.