Broadcom could bid for Agere

Rethink IT, Nov, 2004

There are rumors that Broadcom is to take over Agere, which would boost the former's cellphone chip business, into which it has been putting significant efforts this year, as well as its wireless Lan technology and market share. (It would also bring a new business line for Broadcom in storage, where Agere is market leader in providing integrated circuits for hard disk drives, and one in base station DSPs.

The speculation has been sparked by the settlement of outstanding lawsuits between the two companies Broadcom has agreed to take a charge of $27.5m to settle all patent litigation with Agere.

Agere, a spin-off from Lucent. was an early player in Wi-Fi, Lucent having acquired an 802.11 b chip pioneer, WaveLan. It supplied silicon for many early wireless products, such as the first generation from Linksys and Apple However; it subsequently defocused on Wi-Fi, selling its WLan equipment business to Proxim and becoming stagnant in the 802.11 chip market. Between 2002 and 2003 it slipped from number two to number five in the Wi-fi chip sector by revenue and in 2004 will be lower than that, despite some renewed signs of interest in the market.

It has struggled with independence and has long looked ripe to be acquired, combining strong technology and partnerships with a shaky financial record--last November it reported its first quarterly profit since going public in March 2001, but warned it would go back into the red in first quarter of fiscal 2004, because of restructuring costs It reported net income of $2m for its latest quarter" Q3, compared with a net loss of $78m a year ago, but saw a decline on Q2, being hit by industry wide inventory glut problems and by issues with three of its major 3G chipset customers, particularly slow roll out by Hutchison.

On the Wi-Fi technology side, Agere would complement Broadcom's approach perfectly Broadcom has based its success in this market at staying at the forefront of performance and anticipating standards, as it did to best effect with its pre-standard 802.11g onslaught, a move that caught all its rivals offguard and brought the company hurtling into the top three WLan chipmakers.

Agere, though less commercially successful and with none of Broadcom's sense of timing, has very advanced performance-enhanced Wi-Fi technology In March, it introduced a semi proprietary, turbocharged 802.11a/g/b chipset, claiming peak rates of 150Mbps, faster than any rival.

It is also spearheading one of the proposals rot the upcoming 802.11n 100Mbps-plus Wi-Fi standard. And now it has announced methods of speeding up its Wavel AN 802.11 a/b/g chips using a software overlay that uses a mixture of heightened receiver sensitivity, packet bursting, compression and quality of service (QoS) techniques to boost throughput.