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Broadcom announced today that it plans to acquire 4G chip maker Beceem Communications for $316 million in cash as it tries to get a leg up on supplying the next generation of wireless technology to companies making wireless infrastructure products as well as those making cell phones, computers, and other consumer electronics.
Broadcom said that the acquisition would accelerate its “time-to-market in 4G by adding a talented team” of engineers. Broadcom already offers chips that enable several types of network connectivity technology, including 2G/3G cellular, Wi-Fi, Bluetooth, GPS, and Ethernet switching. Adding Beceem’s 4G technology will allow the company to offer a full suite of products including the next generation of wireless technology to device manufacturers and infrastructure providers, which will hopefully lead to better integration and lower costs.
“Fourth generation” wireless technology is the next evolution in wireless that today is based on two major technology types: Long Term Evolution, or LTE, and WiMax. Many wireless operators throughout the world are already on a path to deploy one of these technologies. LTE is likely to be the dominant technology used throughout the world with 132 operators in 56 countries already investing in or committed to deploying LTE. Verizon Wireless is the first major carrier in the U.S. to deploy the technology. It’s expected to launch its network that will cover more than a 110 million people in 38 markets by the end of the year.
Meanwhile, WiMax is another technology that is being used to bring broadband-like speeds to wireless networks. More than 550 networks in 148 countries have already been built using WiMax. Sprint Nextel, through its partnership with Clearwire, is building a nationwide 4G network using WiMax. It is already in more than 55 markets in the U.S. Beceem is supplying technology for bay stations used in the Clearwire network.
Beceem’s chips integrate both LTE and WiMax, which could allow wireless operators to deploy and use both LTE and WiMax in parts of their network. It could also be used to allow device makers to build products that can be used on either network. While LTE and WiMax are considered different technologies, they share the same type of modulation known as OFDM.
Broadcom said it expects the acquisition to be neutral to earnings in 2011. And the transaction is expected to close by the end of the first quarter of next year.
