Qualcomm to Buy Atheros for $3.1 Billion

Qualcomm Inc. agreed to buy Wi-Fi chip maker Atheros Communications Inc. for $3.1 billion in cash as it aims to address growing demand for devices that use Wi-Fi to connect to the Internet.The deal—Qualcomm's largest acquisition to date—fills a hole in the company's communication-chip offerings. The importance of Wi-Fi has been growing as more devices—including smartphones, tablets and notebooks—connect to the Internet.

The deal, which values Atheros at $45 a share, comes during a flurry of acquisitions in the technology sector and puts pressure on Qualcomm's rivals, such as Broadcom Corp. Chip companies, including Intel Corp., have been using their high levels of cash to make purchases to add more features to their chips. Qualcomm has about $10 billion in short-term cash and marketable securities. Adding long-term marketable securities raises the figure to $18.4 billion, with $12.1 billion of that located offshore, the company said.

A takeover of Atheros gives Qualcomm greater exposure to Wi-Fi chips and other markets where it doesn't have a significant presence, including providing components for laptop personal computers, which now come standard with Wi-Fi chips.

The deal is expected to close in the first half of 2011 and modestly add to Qualcomm earnings in fiscal 2012. Atheros will be renamed Qualcomm Networking & Connectivity, and Atheros President and CEO Craig Barratt will join the company as president of the group. Mr. Jacobs said Qualcomm also plans to retain the rest of the Atheros senior management team.

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Marvell acquires DS2 intellectual property and assets

Marvell's acquisition of the intellectual property and assets of DS2 has rolled up the last of the big independent powerline networking chipset vendors. First, CopperGate acquired the HomePlug assets from Conexant (and then itself got purchased by Sigma Designs), and Atheros purchased Intellon. It's a trend that signifies the importance of well-integrated networking solutions that may leverage at least a couple of networking technologies, including Wi-Fi and "no-new-wires." Second, these larger vendors are much closer to the end-user manufacturers, as they're building integrated solution for things like set-top boxes, modems, residential gateways, etc., and it's a sign that significant growth is coming in the embedded market for powerline networking solutions. Finally, with some corporate structure wrapped around the powerline assets, maybe we'll see some adult conversations occuring around how to finally end a ten-year+ standards battle in this market.

Bluetooth Core Specification Version 3.0 + High Speed - We've Waited Six+ Years for This!

The folks at Atheros caught me up on the new Bluetooth Core Specification Version 3.0 + High Speed announcement (see their press release here). This is pretty cool stuff, and it's applications that I had seen coming six years ago during all of the buzz about ultra-wideband (UWB). Basically, it's the question of how mobile and portable devices can do data transfers (digital camera to a PC or iPhone to a stereo system) at higher speeds while consuming less power? Given the rough time that UWB is having, it just doesn't sound like it'll be the solution that mobile device, PC, and consumer electronics companies are going to implement anytime soon.

So, now comes this new spec from Bluetooth. It greatly expands the data rate for Bluetooth products from the pokey 1 Mbps or 3 Mbps currently available in basic or Extended Data Rate (EDR) to 20 Mbps+. This occurs by using the Wi-Fi chipset already in all laptops and a growing number of handhelds to perform the actual heavy lifting. Otherwise, Bluetooth devices retain their simple pairing, and - as Atheros noted - this solution becomes backward compatible to all Bluetooth devices already in the field (which also have a .11g or .11n chipset in them). So, it sounds like a pretty easy way to greatly enhance the performance of a bunch of CE devices for things like audio, video, and photo transfers. The benefit to CE manufacturers is no need to mess with new radios or additional costs.

Atheros allows mobile Wi-Fi devices to do peer-to-peer networking

This was an interesting announcement from Atheros. Atheros’ WLAN technology will allow client devices such as PCs, handsets, cameras, MP3 players, wireless printers and set-top boxes to connect directly to other clients, without the use of an access point. This technology also provides smartphones with soft AP capability, which supports multiple clients.

We see the demand for mobile devices enabled with wireless networking, so this seems like a good fit for Atheros.