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ARM Grasps Artisan for Embedded Chips

p>Semiconductor design firm ARM is took a major leap into the embedded microprocessor space by acquiring Artisan Components , producer of embedded memory, standard cell, input/output, analog and mixed-signal components.

The estimated $913 million deal will extend ARM's base of offerings to include a roster of digital, analog and mixed-signal components for building systems-on-chip (SoC) .

SoCs are growing in popularity because they hold all of the necessary hardware and electronic circuitry for a complete system. The building blocks are used widely in cameras, cellular phones, set-top boxes and PDAs. A basic SoC will include on-chip memory (RAM and ROM), the microprocessor, peripheral interfaces, I/O logic control, data converters and other components that comprise a complete computer system. Applications also include uses in nanotechnology and medical technology.

Jerry Ardizzone, ARM president of U.S. operations, told internetnews.com that his company's IP portfolio had been somewhat limited to microprocessors. But with Artisan, ARM can offer one-stop design shopping for its 130 semiconductor manufacturing partners and Artisan's 2,000 customers in semiconductor design and manufacturing, he said.

"Generally the embedded market is growing, especially if you look at the shift from 8-bit to 16-bit to 32-bit market," Ardizzone said. "You will start to see many 8-bit chips move to 32-bit, and that provides an opportunity for us since we are strongest in the 32-bit space. Wireless continues to be a very strong category for us. If you walk into any electronics retailer, there are new opportunities for us in portable, handheld and wireless devices, as well as automotive, satellite, cable boxes, personal video recorders, and HDTV."

Ardizzone said ARM and Artisan have complementary IP, sales channels and business models, and they share client lists, including Intel, LSI Logic, Sun Microsystems, Texas Instruments and QUALCOMM. Ardizzone said ARM will market its combined product line to an entire spectrum of customers, including ones working in automotive, consumer, networking, printing and imaging and storage. In some cases, the marketing will be selective, as in the case of ARM's 3D graphic accelerators, which are used more in some markets than in others.

"There are also many companies building SoCs that are not as big as TI or QUALCOMM that are matching licensable blocks in ASSPs [Application Specific Standard Products]," Ardizzone said. "They have the choice of making their own designs versus buying their chip designs. And we think if we have compelling solutions for these manufacturers then they will be more interested."

The acquisition has the blessing of both company's executive boards, and plans are in the works to align the leadership. ARM said CEO Warren East would continue to lead the combined companies, with Lucio Lanza, chairman of Artisan, and Mark Templeton, president and CEO of Artisan, joining the board of directors of ARM as a non-executive director and an executive director, respectively, on completion of the transaction.

Immediately following the acquisition, Ardizzone said ARM and Artisan would keep their respective business units intact and continue to operate their satellite offices. If anything, he said, ARM might increase its staff of 140 people to well over 200 in the Silicon Valley, so it can be closer to the companies it serves.

Just in case the government or shareholders don't see eye to eye on the acquisition, ARM has agreed to pay a break-up fee to Artisan of approximately $18 million. Artisan, sensing the same, has also agreed to pay a break-up fee to ARM of approximately $31 million or $18 million, depending on if the deal breaks down and how it is played out.

The companies said the paperwork should clear in the fourth quarter of 2004 pending shareholder and U.S. and U.K. regulatory approval.