Chip-maker Broadcom Corp. is buying a semiconductor
enterprise that gives it a foothold in India's potentially huge cable market.
The deal to buy Armedia Inc. for about $66.5 million in
stock came as Broadcom completed two other acquisitions aimed at expanding its product
line into voice, video and high-speed-data convergence.
Broadcom last week completed its buyout of San Jose,
Calif.-based Maverick Networks, which provides silicon for multilayer switching equipment
in enterprise networks.
It also closed a deal in late April to buy Epigram Inc., a
leading developer of chip solutions for standards-based home-networking gear.
Broadcom will set up a new Indian subsidiary to be staffed
initially by the 31 employees of Armedia's design subsidiary in Bangalore, often called
the Asian subcontinent's Silicon Valley.
Armedia develops integrated circuits used as
high-performance digital-video decoders, licensing its products to electronics
manufacturers. Broadcom said the key asset was Armedia's research-and-development
capabilities, which will support the company worldwide.
"We're getting some pretty high-powered
technology," Broadcom chief financial officer Bill Ruehle said, noting that the
company had been already been working with Armedia for more than one year. "Our
ability to pick up more than 30 highly qualified engineers was very significant."
Armedia also positions Broadcom to be a leading supplier of
integrated circuits for cable modems and digital set-top boxes in India, where
privatization has opened new business lines, such as Internet access and telephony, to
cable.
The nation of about 1 billion people has some 60 million
television households, including an estimated 20 million cable homes nationwide, all using
analog technology.
Besides cable, the market for digital-terrestrial
broadcasting is expected to accelerate, with state-run broadcaster Doordarshan planning a
digital launch in the near future.
"We expect to be able to bring Broadcom's world-class
broadband solutions to the Indian market and to play a key role in facilitating the
development of India's next-generation communications infrastructure," Armedia
president Tushar Dave said in a news release.
Broadcom will integrate Armedia's U.S. employees and
Maverick's workers into its own existing operations in San Jose.
Broadcom faces increased competition in some of its
dominant categories, such as silicon solutions for cable modems.
Lucent Technologies' Microelectronics group is close to
completing a deal to buy Libit Signal Processing Ltd., another supplier of silicon
integrated into modems certified as interoperable under the cable industry's Data Over
Cable Service Interface Specification standards.
Lucent has a huge worldwide sales force, significant
semiconductor-development and fabrication capacity and the renowned Bell Laboratories
research organization.
