Broadcom Adds 3G to its Wireless Mix

Looking to provide 3G for mobile phones, Broadcom agreed
to buy Zyray Wireless for $96 million in stock.

Zyray makes co-processors that facilitate Wideband Code Division Multiple
Access (WCDMA), a high-speed 3G wireless technology with the
capacity to offer higher data speeds than CDMA for wireless
phones. Broadcom will integrate the San Diego, Calif., company’s SPINNERchip
line, whose chips connect to EDGE/GPRS/GSM baseband processors via a
standard memory interface.

SPINNERchip, which is currently being integrated into several handset
designs, aims to help device manufacturers bring 3G phones to market more
rapidly, something that industry analysts predicted would happen several
years ago. But while 3G is fairly advanced in Asia-Pacific and Europe, the
technology has yet to catch on in the United States.

Broadcom, an Irvine, Calif.-based chipmaker that competes with Agere Systems,
Applied Micro Circuits Corp. and
Marvell Technology Group, hopes to help change that with the Zyray purchase.

The company said in a statement it believes pairing SPINNERchip technology
with its single-chip EDGE/GPRS/GSM and GPRS/GSM baseband processors will
propel WCDMA multi-mode phones in the near term and “provide the potential
for future solutions with enhanced integration.”

WCDMA is so desirable to mobile phone makers and cellular carriers because
it provides high-speed mobile connectivity with data rates of up to 384
kilobits per second. This higher bit rate makes possible applications for
video telephony and messaging, rich media, interactive gaming, improved Web
browsing and GPRS services.

This is crucial because many industry experts believe cellular phones will
soon emerge as a personal communications hub for users. They will be able to play
games, chat, browse the Web, watch streaming video and download music. This
makes 3G highly lucrative for cellular carriers, which rely on bumping up
the average revenue per user to make profits.

According to a recent Deutsche Bank Securities report, the worldwide WCDMA
market is expected to approach 200 million units by 2008, representing more than
one-fourth of the total handset sales.

“We see significant activity in the WCDMA handset space, and having Zyray’s
products and technologies in-house gives us the flexibility of offering our
customers the ability to manufacture both low-cost EDGE phones, as well as
higher functionality WCDMA handsets,” said Robert Rango, group vice
president of Broadcom’s Mobile & Wireless Group, in a statement.

Broadcom will also tuck in next-generation technology from Zyray, including
High Speed Downlink Packet Access (HSDPA) for integration into its next-generation
family of devices. HSDPA is the next step in the cellular
evolutionary path after WCDMA and is expected to provide data rates of up to
10 megabits per second.

Zyray is also developing Multi-In, Multi-Out (MIMO) transceiver technology
that can vastly improve the performance of WCDMA and HSDPA. MIMO provides
radio links with multiple antennas on the transmitter and receiver to
improve wireless connectivity.

Broadcom, which expects the merger to close in its third fiscal quarter, has
made a number of purchases in the past year to pad its chip lines. Most
recently, the vendor acquired
data-compression chipmaker San Video in April.

But Broadcom has been on a storage asset kick of sorts. Since buying
bankrupt Gadzoox Networks last year, the company has acquired
controller maker RAIDCore, as well as
storage patents
from Cirrus Logic.

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