Broadcom Buys Bluetooth Chip Maker

Broadband circuit integrator Broadcom
Tuesday acquired Innovent Systems Inc., a radio
frequency pioneer of short-range wireless data communications, for $440

The purchase places Innovent’s fully integrated digital RF transceiver
semiconductor technology in Broadcom’s wireless
product portfolio.

Innovent’s innovative use of Bluetooth technology may be the new
standard of integrated wireless communications. The purchase solidifies
Broadcom’s leadership in the high-speed wireless arena, specifically the
short-range market segment.

Cell phone companies LM Ericsson
Telephone Co.
and Nokia Corp. in
Europe, as well as Intel Corp. and International Business
Machines Corp.
in the U.S have driven the acceptance
of the Bluetooth standard in mobile communications devices.

Innovent’s patent-pending implementation of RF technology in a digital CMOS
integrated circuit process provides significant cost and manufacturing
advantages for short-range wireless products. Manufacturer’s can tap into
the integration technology for as little as $5 a chip.

Bluetooth wireless technology provides a low-cost means for communication
and networking between mobile phones and other portable devices, as long as
line-of-sight is not an issue.

With the purchase Broadcom is free to develop product lines that combine
RF, baseband, systems and software services that target Bluetooth
applications running on Personal Area Networks and wireless Local Area

Dr. Henry T. Nicholas III, Broadcom president and chief executive officer
said the Innovent acquisition demonstrated its intent to be a formidable
competitor in wireless markets worldwide.

“Integrating Innovent’s capabilities in CMOS RF and Bluetooth with our
expertise in mixed-signal, home networking, high speed networking and
broadband communications technologies provides Broadcom with a powerful
platform to address the rapidly growing wireless marketplace,” Nicholas said.

Broadcom has supported the California-based business through it seed
investment stage and has had close ties with the company from Innovent’s
inception in 1999. Prior to the acquisition, Broadcom already owned
approximately 13 percent of Innovent.

Dr. Henry Samueli, Broadcom co-founder and chief technical officer, said
the long-term academic and working relationship between it and Innovent’s
co-founders enhances the synergy of the business deal.

“From our shared research roots at UCLA
to a strategic investment partnership and now a merger of our businesses
and top engineering talent, we believe the combined teams of both companies
will continue to offer groundbreaking technology to an exploding
marketplace in both wired and wireless communications,” Samueli said.

In addition to securing access to Innovent’s core technology, the purchase
also provides Broadcom with a talented group of engineers, experts in the
use of the chipset and wireless electronic device designs.

While PANs are relatively new system set-ups, the technology that allows
users to transfer information across multiple devices is rooted in wireless

Dr. William T. Colleran, Innovent president and chief executive officer,
said the combination of the two companies make for a formidable force in
wireless communications.

“The combination of Innovent’s extensive experience in CMOS RF chip
development and Broadcom’s business and technical strengths in broadband
communications w

ill create unique, world-class solutions for the rapidly
growing wireless product arena,” Colleran said.

“Broadcom’s market presence and business infrastructure will accelerate
Innovent’s ability to bring our Blutonium line of wireless chips to a
market that is eager to implement this technology in real products,”
Colleran added.

According to research by eTForecasts, only 2 percent of the
Internet users in the U.S. currently access the Internet with a Web
appliance. But in the next five years the availability of portable
appliances will dramatically change the marketplace.

By the end of 2005, eTForecasts predicts that 55 percent of Internet users
in the U.S. will access the Web through handheld devices, in addition to PC
Internet access for home use.

The same report predicts that worldwide Web appliances will have an even
stronger impact on wireless access to the Internet. At the end of this year
it’s estimated that 6 percent of Internet users will access the Web through
a portable device and that the market segment will grow to over 71 percent
by the end of 2005.

eTForecasts anticipates that Web-enabled phones will be a major factor in
driving the rapid growth of the market.

Dr. Egil Juliussen, eTForecasts analyst and author of the reports said this
market shaft does not mean that the PC is dead, merely that user’s want to
take the Net with them, wherever they go.

“This does not mean the end of PCs as Internet access devices, but an
increasing share of Internet users will augment their online life with web
appliances,” Juliussen said. “PCs will remain the leading Internet access
device, especially for heavy-duty usage. By 2005 most Internet users will
be accessing the web from both PCs and information appliances such as web
cellular phones and web appliances.”

Innovent and Broadcom have a number of product demonstrations scheduled for
the Bluetooth Congress 2000
in Monte Carlo this week, including full wireless Internet web browsing
incorporating video and audio streaming across a Bluetooth link implemented
with Innovent’s CMOS RF transceiver.

As a part of the deal, Broadcom will issue an aggregate of approximately 3
million shares of its Class A Common Stock in exchange for all outstanding
shares of Innovent Preferred and Common Stock after exercising outstanding
employee stock options.

The transaction is expected to close within 60 days as the boards of
directors of both companies have approved the merger. Currently the deal
must be approved by Innovent shareholders and in compliance with regulatory
requirements and other customary closing conditions.

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