Belfast Telegraph

Intel acquires software firm McAfee in $7.7bn shock deal

By Stephen Foley

Intel, the world's largest maker of microchips, is paying $7.7bn for the software company McAfee, in a deal analysts described as "weird" and "out of left field".

Intel insisted that it would usher in an era where security against hackers and viruses was built into the very hardware at the heart of the industry.

McAfee, famous for software that scans for viruses and installs firewalls, agreed to sell to Intel at a 60% premium to the prevailing share price.

They have been collaborating for 18 months on new products that will embed McAfee security software within Intel's new technology for smartphones and other internet-enabled devices, from televisions to ATMs.

"In the 1990s, when we added capabilities to our platform so users could connect to the internet, PC demand exploded," said Paul Otellini, the Intel chief executive.

"But the increased use of the internet is leading to an increased level of security threats. The number of security threats is increasing, and security will be most effective when embedded in hardware."

Security will be a "third pillar" alongside energy efficiency and connectivity when electronics manufacturers are choosing between chip technology platforms, he said.

"It's slightly out of left field - nobody would have seen this coming," said Chris Hickey, an analyst at Atlantic Equities. But he also said Intel could gain from selling software to its PC customers.

Intel chips are used in the majority of personal computers, but it has fallen behind in smartphone technology and in other electronic devices.

The company warned last week that it had registered record numbers of new malware threats in the first half of 2010, as hackers seek to obtain the personal details of internet users, or simply to disrupt PC activity.

McAfee's quarterly report said it was finding 55,000 new threats every day.