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Broadcom has continued its recent acquisition spree, pushing into the heavyweight infrastructure market with the $3.7bn purchase of NetLogic Microsystems. This will take the chip vendor into unfamiliar pastures, meeting Freescale, Cavium and even Intel in the network processor segment, targeting base stations and network infrastructure.

Broadcom's heartlands are in connected consumer devices from set-top boxes to DSL/Wi-Fi routers to cellphones and most of its acquisitions have bolstered those core activities. For instance, when it bought femtocell maker Percello, it was heavily targeted on consumer femtocells, rather than their larger outdoor cousins, the metrocells.

However, as Qualcomm and others encroach on Broadcom's strongholds, and margins in consumer devices shrink, the company has been looking for new territories. The end of 2009 saw it buying Dune Networks, a maker of high end network switches, and earlier this year it expanded its backhaul business with the takeover of microwave specialist Provigent.

Its interest in the communications infrastructure market, which is riding on the wave of broadband data usage, is seen in the price it has paid for NetLogic - at $50 a share, it is paying a 57% premium on Friday's close, and 69% above the smaller firm's average share price for the 20 days before the deal. This is despite the fact that NetLogic made a net loss of $66.4m in 2010 (though a profit of $107.4m after extraordinary items), on revenues of $381.7m. However, Broadcom said the acquisition will boost its 2012 earnings per share, excluding some items, by 10 cents. Both boards have approved the deal, and it is expected to close in the first half of 2012.

Broadcom said the acquisition will more than double its addressable market in network infrastructure and bring some important products and engineers. NetLogic gained a major boost last year when it acquired multicore processor specialist RMI, and last week it unveiled its new generation network processor, the XLP II, with no fewer than 80 cores, targeting LTE infrastructure as well as enterprise networks and cloud storage applications. The Broadcom statement said the transaction would bring it "knowledge-based processors, multicore embedded processors and digital front end processors for wireless base stations." Such products will now take Broadcom up against the king of the space, Freescale, plus Cavium, AMCC, Renesas and Texas Instruments.

"The premium is fair," Broadcom CEO Scott McGregor told Bloomberg. "This acquisition expands our market into additional networking opportunities." The deal is the fourth largest US chip acquisition of the past five years and the second largest this year after TI's purchase of National Semiconductor.

Meanwhile, the firm increasingly runs up against Qualcomm as it develops integrated SoCs for the digital home and mobile markets. One area of collision will be femtocells, where Qualcomm has developed a residential platform and where it has now unveiled a chipset for enterprise or metro small cell base stations. Uncharacteristically, Qualcomm has not been driving the market for femtos, but has been low-key in its activities, letting Picochip and Broadcom make the running. However, now the residential segment is gaining mass and major silicon players, like Freescale and Texas Instruments, are targeting the newer breed of carrier class metrocells. Qualcomm is heading towards that base now, starting with the FSM9832, which will handle up to 32 active users.

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