Samsung Electronics agreed to buy the wireless unit of British chipmaker CSR for $310 million, broadening its silicon portfolio and mobile patent position in the process.
As part of the deal Samsung will get CSR's Wi-Fi, GPS and Bluetooth units along with 310 employees. Samsung will also pay $34.4 million to take a 4.9 percent stake in CSR.
The transaction highlights Samsung's belief in the importance of mobile and its willingness to spend cash to beef up its own component business, which it can use for its own cell phones or for others. Samsung is a major memory chipset supplier and also produces applications processors, including its ARM-based Exynos line. Samsung also makes Apple's (NASDAQ:AAPL) A4 and A5 chipsets for its iPhones and iPads.
"I think they [Samsung] want to diversify," Forward Concepts analyst Will Strauss told FierceWireless. "From a semiconductor standpoint they have had a very, very narrow portfolio. And this will provide them things that go into cell phones, like GPS, they that they did not have before."
Strauss also noted that the deal could mean a bigger role for Samsung in the so-called combo chipset market, which is focused on chips combining Wi-Fi, Bluetooth,GPS and FM radios. According to Forward Concepts, the $3 billion market is led by Broadcom with 51 percent, Texas Instruments at 31 percent and Marvell with 6 percent.
Importantly, the deal also includes access to CSR's intellectual property. Under the deal Samsung will have a worldwide, perpetual, royalty-free, non-exclusive license of CSR's intellectual property rights used in its handset connectivity and location products. Samsung will get access to 21 U.S. patents, including their respective international counterparts, which will be licensed back to CSR in perpetuity on a royalty-free basis.
CSR was founded in 1998 and went public in 2004. However, over the past few years the company has struggled due to the failings of some of its customers, such as Nokia (NYSE:NOK) and Research In Motion (NASDAQ:RIMM). CSR's profits have fallen around 50 percent over the past two years.
CSR's wireless business was "too small to compete with giants of the semiconductor industry," CSR CEO Joep Van Beurden told Bloomberg. The unit is "much more valuable to Samsung than it was to us, so it made sense to leverage that to create value for our shareholders."
- see this GigaOM article
- see this Reuters article
- see this Bloomberg article
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