Broadcom buys into 4G devices with Beceem

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Broadcom buys into 4G devices with Beceem

To pay $316m for the WiMAX and LTE baseband pioneer

By CAROLINE GABRIEL

Published: 13 October, 2010

READ MORE: M&A | Broadcom | Beceem Communications | Semiconductor | LTE

Everyone has been waiting for Broadcom to show its hand in 4G devices, as it continues to make steady, if gradual, progress in 3G basebands. Now it has made a characteristic move - buying in expertise just as the market is poised to achieve volume. It is to pay about $316m to acquire Beceem, one of the most impressive of the host of WiMAX silicon specialists, which recently expanded its offerings to embrace LTE too.

Beceem is best known for supplying the modems for many of Clearwire's devices. It made early moves into Mobile WiMAX for handsets and dongles, while many WiMAX pioneers stayed focused on fixed CPE. Along with Sequans and Altair it was the most successful of the independent device-side WiMAX chip vendors, and all these firms have recently introduced LTE to their platforms too. Beceem has also been promoting the idea that some carriers would require dual-mode LTE/WiMAX solutions, particularly those, like Clearwire, that may deploy parallel networks supporting both technologies.

Now Beceem will be part of Broadcom, which is likely to focus mainly on the LTE side of the equation. Like larger baseband suppliers such as Qualcomm and Infineon - and independents like Icera - it will be important to announce early design wins to gain credibility as OEMs start to roll out 4G data cards, handsets and other devices. Broadcom has mainly built its relatively new cellular business around GSM/EDGE, where it is a preferred supplier to Nokia, but it did grow its baseband revenue by 245% year-on-year in the second quarter, according to Strategy Analytics, as it gained new design wins at Nokia and Samsung for EDGE and W-CDMA.

Now the US firm says its latest acquisition will accelerate its move into silicon for 4G devices. "Beceem's talented teams of engineers in India and the US have been focused on enabling a 4G ecosystem of operators and equipment manufacturers to drive the deployment of 4G networks," said Scott Bibaud, general manager of Broadcom's mobile platforms group.

The purchase price will be paid in cash, except the for unvested Beeceem employee stock options that will be paid in Broadcom stock options. Broadcom expects the acquisition to be neutral to earnings in 2011. The boards of directors of the two companies have approved the merger. The transaction is expected to close by the end of March.