Intel paid $884m in cash on Thursday for Wind River Systems, a software company that should help the chipmaker’s push into new markets.

Wind River, based in the San Francisco Bay area, represents Intel’s biggest acquisition in the four-year tenure of Paul Otellini as chief executive.

Mr Otellini stressed at the company’s analyst day last month that software was now a “core competency” for the world’s biggest chipmaker as it entered new markets in the mobile device and embedded systems industries. Wind River makes software that helps companies programme and manage devices such as mobile phones and in-car entertainment systems. Intel is keen to expand into markets such as these as growth slows in the more mature PC and server markets that it currently dominates.

Intel’s strategy is built around its Atom processor – a chip that is smaller and requires much less power than its regular PC microprocessors, putting it in competition with chips based on designs by the UK’s Arm Holdings.

Mr Otellini believes Intel can build a key advantage for Atom by supporting it with a large software effort.

“This acquisition will bring us complementary, market-leading software assets and an incredibly talented group of people to help us continue to grow our embedded systems and mobile device capabilities,” said Renee James, Intel vice-president and general manager of the company’s Software and Services Group.

Atom has so far dominated the netbook category of small, cheap notebook computers. Intel is supporting its adoption through development of a new open source operating system to rival Windows, called Moblin.

Intel will pay $11.50 per Wind River share, a 44 per cent premium to the closing price on Wednesday. The company’s stock soared $3.54 or 44 per cent to $11.54 at the open on Thursday.

Wind River, which has 1,600 employees, had annual revenues of $359.7m in 2008, an increase of $31.2m from the previous year. The company also moved into profit in fiscal year 2009 of $10.8m from a loss of $2.4m the year before.