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

“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

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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