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RFMD Snaps Up IBM's GPS Development Operation

RF Micro Devices Inc. , eager to tap into what it believes will be a billion dollar market for GPS integrated circuits (ICs), Tuesday mobilized to secure a dominant position in the industry with a deal to acquire IBM Corp.'s GPS development operation.

Terms of the deal were not disclosed. RFMD said it anticipates closing the transaction in its third quarter.

IBM's GPS development operation consists mostly of engineers and technical marketing specialists. The team was the first to introduce GPS solutions using Silicon Germanium (SiGe), which reduces size, power consumption and noise figure, and enables higher levels of integration. Along with the employees, RFMD will pick up those advanced GPS technologies -- along with all intellectual property associated with the products -- and access to Big Blue's chipscale packaging technology. RFMD said it plans to file for patent protection for the intellectual property it receives.

RFMD said it will incorporate the operation in its Communications Semiconductor Division, and will add new design centers in Fishkill, N.Y. and Irvine, Calif.

The acquisition would immediately add GPS chipsets -- which include the digital signal processor, low noise amplifier and radio frequency integrated circuit (RFIC) -- and GPS modules to RFMD's product portfolio. While existing customers include companies which offer in-car, hand-held and marine navigation services, RFMD is primarily eyeing the handset manufacturers.

"The GPS products and expertise we've acquired significantly broaden our total addressable market," said Jerry Neal, executive vice president of marketing and strategic development at RFMD. "Industry analysts estimate the global market for GPS integrated circuits will grow to approximately $1.2 billion in 2005 from approximately $270 million in 2000. Of the $1.2 billion, nearly half is forecast for use in mobile handsets. Accordingly, we fully expect our leadership position in the handset market will help drive sales of our GPS devices."

To whet manufacturers' appetites, RFMD plans to use the acquisition to add GPS functionality -- and the grail of location-based services -- to chips which already feature WLAN and Bluetooth capabilities.

"This acquisition immediately establishes for us a strong presence in the GPS market, while strengthening our extensive module and silicon system development efforts," said William Pratt, chairman and chief technical officer of RFMD. "We expect significant synergy with our core RF design capabilities and anticipate our combined expertise will help to accelerate the commercialization of next-generation solutions currently in development, such as GPS on a single chip."