Broadcom announced it has signed a $316-million deal to acquire privately held Beceem Communications to enable it to get a leg up in the next-generation chip market that consists of WiMAX and LTE.
Rather than focusing its R&D on LTE, Broadcom chose to focus on additional opportunities in the 2G and 3G chip market, Scott Bibaud, Broadcom's executive vice president and general manager for mobile platforms, told FierceBroadbandWireless.
"The development costs associated with 4G are substantial. We have technologists who could have developed this, but we saw opportunities in 2G and 3G we wanted to leverage instead. So we let outside startups continue to invest," Bibaud said. "It probably meant that we could have built a 4G solution a little more cheaply if we built it in-house, but we ended up taking resources and focusing them on more near-term revenues, and that made paying more for Beceem financially wise."
Broadcom has been searching for a 4G chip acquisition for about a year. Bibaud said the company choose Beceem because of its longevity and leadership in the WiMAX space, of which it holds about a 65-percent market share. But WiMAX is a means to an end. Beceem has been touting over the last several months its multi-mode LTE/WiMAX chipset strategy.
"They have a good robust market in WiMAX today, and we definitely want to support those revenues, but we'll be more focused on multi-mode WiMAX/LTE moving forward," Bibaud said. "Most WiMAX carriers are planning to move to LTE but can't tell you exactly when. But if you bring a multimode WiMAX/LTE solution, their subscribers don't have to change equipment when moving to LTE, which is attractive to carriers out there."
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.
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