By Shara Tibken, Dow Jones Newswires
Monday 23 January 2012
Deal seen bolstering chip maker's data centre, supercomputer solutions.
Intel Corp. agreed to acquire QLogic Corp.'s InfiniBand business for $125 million in cash, giving it networking technology for the growing and competitive supercomputer market.
The deal also is seen benefiting Intel's data-center operations, where revenue jumped 17% in 2011 and topped $10 billion for the first time. Kirk Skaugen, general manager of Intel's data center and connected system group, said the technology will "bring increased options" to the company's data-center customers.
Skaugen noted that the acquisition will help Intel achieve "exascale" computing performance by 2018, or a quintillion operations per second. That is a hundred times more than today's fastest supercomputers.
Click here to find out more!Supercomputers help tackle the toughest scientific problems, including simulating commercial products like new drugs and defense-related applications such as weapons design and code breaking. Most of the biggest machines are used in government-owned labs, but many smaller variants have been used by companies for years in designing products like cars and drugs.
Intel has said it expects the top 100 supercomputers in the world to use about 8 million computer processors in 2019, up from a projected 1 million in 2013.
Intel expects the deal to close by April, and QLogic said the asset sale should be neutral to its per-share earnings. Intel said "a significant number" of employees associated with QLogic's InfiniBand business are expected to accept offers to join Intel. The company declined to specify the number.
Intel shares, up 29% over the past 12 months, rose 1.6% to $26.79 in recent trading. QLogic, down 3.7% over the same period, gained 1% to $16.71.
High-performance computing has been a big focus for Intel and fellow semiconductor makers Advanced Micro Devices Inc. and Nvidia Corp. While supercomputing isn't a high-volume business, the processors typically are top-performing and command higher prices.
In addition, Intel has been expanding its offerings in the data center sector beyond servers. To give it exposure to the networking industry, the company bought Ethernet switch chip maker Fulcrum Microsystems Inc. last year. Intel is expecting data center revenue to double within five years.
Bernstein analyst Stacy Rasgon said Intel has been building its capabilities in the data center to play to its strong suit--high-performing chips. While its processors aren't as power efficient as some rival architectures, they are able to address compute-intensive tasks. Supercomputing is particularly attractive because cost and power consumption are less of a focus for the users.
"It's all about performance," Rasgon said."Intel's highest level of technology is going into this area, and it's growing."
Meanwhile, QLogic Chief Executive Simon Biddiscombe said at a conference earlier this month that the company's InfiniBand technology is preferred to other forms of networking for high-performance computing in part because of its low latency.
QLogic on Monday said it will focus on growth opportunities for the data center as the sale strengthens its cash position.
Melodie Warner contributed to this article.
