Intel, the world's largest computer-chip maker, agreed to acquire Avago's Axxia networking business for $650 million.

Intel is paying cash for the unit, which generated $113 million in revenue last year and employs about 650 people, Singapore-based Avago said yesterday in a statement.

The purchase will help Intel provide more chips to mobile- phone service providers and expand its ability to win sales in what it predicts will be a $16 billion market, according to an online statement by Rose Schooler, a vice president of the company's data group.

California-based Intel is getting a greater proportion of its server sales from makers of networking gear and storage equipment as those industries look for ways to reduce costs by using cheaper Intel chip-based servers and depending less on expensive networking equipment.

Intel shares rose 2.9 per cent to $34.10 at yesterday’s close in New York. They’ve gained 31 per cent this year.

Bloomberg