According to two separate sources, Cisco commissioned Intel to mass produce specialized chips that will be used to power upcoming switches and routers. The new deal represents an extension of the networking giant’s existing OEM relation with the chipmaker.

“Cisco has a long-standing relationship with Intel,” said Karen Tillman, a spokeswoman for the San Jose, California-based Cisco. “The company is one of several strategic suppliers of silicon to Cisco. However, Cisco does not comment on the specifics of its relationship with suppliers.”

The lucrative deal is good news for Intel, which has seen demand for PC processors decline over the course of the past few years.  The company is now actively pursuing opportunities to gain share in the mobile market.

The deal is just as momentous for Cisco, a leading hardware provider that requires significant amounts of silicon to fuel its global supply chain. The networking equipment maker is overhauling its portfolio to address the software-led infrastructure trend, and it will need speedy new processors to facilitate the transition.

Cisco is also stepping up software investments outside its core markets.  Last week the company acquired a small share in Parallels, a maker of desktop virtualization software that competes with VMware and Citrix.

The privately-held Russian firm sold one percent of its stock in exchange for a monetary boost, as well as a stronger relationship with one of its key suppliers.  Parallels’ cloud business runs on Cisco’s Unified Data Center architecture, and it’s planning to step up hardware spenditure by a third this year.

Cisco is expanding its footprint in multiple areas. Late last year IDC revealed that the firm grew its presence in the network security industry and accounted for over 15 percent of the revenue generated in this segment worldwide.