Updated: Broadcom is getting into the 4G cellular radio game with its planned acquisition of chipmaker Beceem announced today. Broadcom, which makes a variety of radios used in cell phones, computers and other electronics, said it will pay $316 million for the Santa Clara, Calif.-based startup. Beceem provides WiMAX chips as well as newer chips that can combine WiMAX and LTE radios, which will help companies like Clearwire if it chooses to move to LTE.
The attraction for Broadcom is obvious, as fourth-generation wireless radios won’t be limited to cell phones, but will likely appear in tablets, cameras, industrial sensors and even home appliances as well. It’s a huge potential market and one that Broadcom may be able to break into with this acquisition, even though rivals such as Qualcomm and MediaTek are already big suppliers on the cellular baseband radio side. Broadcom’s 3G business is fairly small, but its ability to integrate multiple radios on a single chip has made it a leader for other types of radios, such as those for Bluetooth and Wi-Fi communications.
As for Beceem, the deal is probably a help, as it filed to go public in April, but has yet to do so. Part of the issue may have been Clearwire’s apparent change of heart with WiMAX; it’s testing LTE, and, thanks to a change in its contract with Intel, it can transition sooner from WiMAX to LTE if it wants to. Beceem, which also counts Intel as an investor, is closely associated with WiMAX, even as it has made efforts to branch into LTE chips. Investors may have been leery of its WiMAX-focused revenue stream and its ability to compete against larger radio companies building LTE baseband chips, making this acquisition a win-win for Beceem’s investors and Broadcom. Perhaps this deal opens the door for other 4G radio startups such as Altair Semiconductor, Wavesat and Sequans to find buyers.
Update: At least one competitor of Beceem’s positions this deal as more of a bail-out for its peer. We received this email comment from Eran Eshed, co-founder and VP of marketing at Altair Semiconductors: “Beceem has no LTE technology today, but has WiMAX revenue which makes the deal easier to position with Broadcom’s shareholders. Beceem’s IPO plans incurred serious challenges in the form of a high valuation in light of a diminishing (WiMAX) market, putting them under pressure to sell.”
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