Applied Micro Circuits to Buy IBM Chip Line

Applied Micro Circuits Corp., whose chips are used by network-equipment makers including Cisco Systems Inc., agreed to pay IBM Corp. $227 million for a line of microprocessors and licenses that could almost double its annual revenue.

The chip line is part of IBM’s 400 series of embedded PowerPC products, used in network equipment such as switches and routers, Applied Micro said. IBM will manufacture the chips for San Diego-based Applied Micro.

Shares of Applied Micro fell 8 cents to $6.20 on Nasdaq. Shares of Armonk, N.Y.-based IBM fell 70 cents to $93.04 on the NYSE.