MIPS sale and patent deal show how weird the chip world has become

Two chip industry deals finalized Tuesday are further evidence that the old guard in the microprocessor industry is on the run.

Imagination, the graphics processor IP company, has said it will acquire MIPS, the creator of an alternative architecture for the chips inside computers and embedded devices, in a deal worth $60 million. MIPS ALSO sold 580 patents to a consortium led by ARM, the company whose ARM (s armh) architecture is inside many of today’s top mobile phones, for $350 million.

Together the two deals mean the end of MIPS as a standalone company, but they keep the MIPS architecture alive as a potential rival to both ARM and the low-power x86 chips that Intel (s intc) has on offer for the mobile and embedded markets. Imagination, whose graphics processor cores are found in Apple’s iPhone (s aapl) products, plans to use the MIPS buy to move upmarket into the application processor and controller market, where it could provide the brains inside mobile devices and compete against ARM-based chips from firms like Qualcomm and Texas Instruments.

The deals are an example of the overall upheaval in the chip market that I’ve been writing about lately, as the design focus switches to greater energy efficiency in both the server and the device side. The stresses of building out a webscale infrastructure that supports our demand for online services at prices that the online ad market can support are driving the adoption of new architectures in the data center. Meanwhile, the need for better battery life over improved performance has led to ARM-based processors gaining ground in higher-end computing platforms. As I wrote last month:

So while an overall decline is sales is occurring, and the PC market is clearly hurting as numbers from Gartner and iSuppli yesterday show, the big picture is that we’re going from two separate architectures locked into a defined space to more architectures and many vendors in a free-for-all.

These deals keep the MIPS architecture in the picture, which is important for the vendors such as Cavium, MediaTek or Broadcom that are building out gear for networking or in the digital home and use MIPS cores.

It may even take the architecture into higher-level computers that use the Android operating system. MIPS-based processors are already used in some low-end Android phones and the architecture runs Android for use in embedded applications.