Intel to buy Chips & Technologies

Intel is acquiring Chips & Technologies, to help boost its graphics and visual product portfolio for mobile PC users. The merger builds on an existing relationship between the two companies to jointly create graphics accelerator chips. Chips & Technologies claims it dominates today's marketplace for notebook graphics accelerators and is currently testing accelerators with integrated memory.

Intel is acquiring Chips & Technologies, to help boost its graphics and visual product portfolio for mobile PC users.

Under the terms of the agreement, Intel will shortly initiate a cash tender offer for all of Chips & Technologies' outstanding shares at a price of US$17.50 per share, putting a value of $420 million on the deal or one Intel share for every five Chips & Technologies shares.

The merger builds on an existing relationship between the two companies to jointly create graphics accelerator chips. Chips & Technologies claims it dominates today's marketplace for notebook graphics accelerators and is currently testing accelerators with integrated memory.

"This is a very natural extension of our cooperative work," said Deborah Conrad, corporate marketing director for Intel Asia-Pacific. Besides working together on an Intel accelerator, Intel and its new acquisition share many of the same large customers in Taiwan. "We believe the Chips and Technologies product portfolio to be outstanding," Conrad said.

Subject to regulatory approval, the acquisition will make Chips & Technologies a wholly-owned Intel subsidiary, merging with Intel's graphics component division.

Jim Stafford, president and CEO of Chips & Technologies, will join Intel as a vice president of its desktop products group. Together with Avtar Saini, vice president and general manager of Intel's platform components division, Stafford will be responsible for co-managing the graphics component division based out of Folsom and San Jose in California.

Intel doesn't expect to announce any changes to its new acquisition's range of products in the near future, company officials said, nor does it forecast any alterations in existing deals that Chips & Technologies already has in place with its customers.

Chips & Technologies stock closed on the Nasdaq exchange on Friday at $14 per share. In the last year, it has ranged from a high of $26.50 in late 1996 to a low of just below $8 in May.

Earlier this month, the company reported results for its most recent fiscal year. For the year ended June 30, revenues were $168 million, up 12 percent from the previous year, and net income was $36.2 million, up 40 percent.

Officials of Chips & Technologies were not available for comment.

Chips & Technologies, based in San Jose, California, can be reached at http://www.chips.com/.

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