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Intel to Pick Up Digital TV Assets

With an eye toward shoring up its silicon technology for digital televisions, Intel agreed to buy Zarlink Semiconductor for $68 million in cash and $2 million in other assets.

Zarlink develops demodulator and tuner technologies for digital televisions. The business generated $53 million in sales as part of the $75 million reported by Zarlink's consumer communications segment.

But the company decided to focus on its core strengths: network communications, optical, and ultra-low power marketplaces, said Kirk Mandy, president and CEO of Zarlink Semiconductor, in a statement.

Mandy added that the deal will also help the RF Front-End consumer business prosper as part of a company that has the scale and critical mass necessary to succeed in the consumer electronics marketplace.

To be sure, Intel will gain technology to help its move into making silicon that powers digital televisions and other consumer electronics products.

Company officials said the Zarlink assets will be assimilated in November as part of a suite of products powering Intel's new consumer electronics platforms.

"The deep expertise in RF/mixed-signal technology that the Zarlink team brings is key to advancing our consumer electronics business," said Glenda Dorchak, vice president and general manager in Intel's consumer electronics group.

In January 2004, the Santa Clara, Calif., chipmaker promised to deliver liquid crystal on silicon (LCoS), a type of LCD in which the crystals and electrodes are sandwiched between polarized glass plates, but failed to get it to market in time and aborted the bid.

Intel attempted to bounce back by purchasing Israel's Oplus, which makes chips and related software for flat-panel plasma and LCD televisions, projection systems, LCD multi-function monitors and emerging digital display applications.

The market for gear that makes digital TV possible is competitive, with Phillips, Sony Electronics and Texas Instruments all bidding for a big piece of the multi-billion-dollar consumer electronics business.

Demand for digital TV is also rising, making competitive moves all the more crucial at this stage for the players.

The market seems to loom largest in Europe, as Datamonitor forecasts that the European digital TV market will grow from 31 million households at the end of 2003 to 89 million households at the end of 2007, with most growth coming from digital cable and terrestrial services.



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