Broadcom snaps up 4G chipset maker Beceem for $316M
Broadcom said it will acquire privately held 4G silicon provider Beceem Communications for $316 million, strengthening its hand in the wireless chipset market.
The deal, which is expected to close by the end of March, will be neutral to Broadcom's earnings in 2011. Broadcom has a wide variety of products for Bluetooth, GPS, WiFi and 2G and 3G technologies, but has often taken a backseat to higher-profile wireless chipset companies such as Qualcomm (NASDAQ:QCOM) and Infineon (whose wireless unit is now part of Intel).
Broadcom said the Beceem acquisition will accelerate its time-to-market position for providing 4G technology solutions. The deal comes as wireless carriers ramp up their next-generation network deployments, with Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and MetroPCS (NASDAQ:PCS) charging ahead in LTE while mobile WiMAX provider Clearwire (NASDAQ:CLWR) builds out its WiMAX network and tests LTE.
Scott Bibaud, Broadcom's executive vice president and general manager for mobile platforms, told FierceWireless that the company had been searching for potential acquisition targets for well over a year. He said Broadcom picked Beceem over competitors like Altair and Sequans for several reasons. For one, he said, Beceem entered the WiMAX chipset market against several competitors and has emerged with a majority market share. Additionally, he said, Beceem's LTE architecture is the kind of design Broadcom wants to incorporate into its solutions in the long term; Bibaud stressed that being first to market is not as important as having the right chipset design.
Beceem, which counts Clearwire as a major customer, filed for an initial public offering of up to $100 million in April. One of Beceem's major strategic investors is Intel, with a 20.3 percent stake. Intel also is an investor in Clearwire.
Beceem, which was a FierceWireless Fierce 15 winner in 2006, has reported losses since it began in 2003. In 2009, the company reported a $17 million loss on $44 million in revenue. In February, Beceem seemed to hedge its bets in WiMAX by announcing a LTE/WiMAX combo chip. The company said the chip will allow devices to seamlessly roam between LTE and WiMAX, and between time division duplex and frequency division duplex configurations.
Bibaud said the combo chip gives Broadcom flexibility. "That was something we thought was very powerful that they're bringing to the table," he said. "It gives us the opportunity to have a differentiated offering."
"Beceem is working on LTE, and LTE is something that Broadcom needs to build on its 3G chip portfolio," Will Strauss, an analyst at Forward Concepts, told FierceWireless. "Besides, Broadcom will get some expertise that's hard to come by."