Qualcomm Bid For Atheros is Focused on the Home

Qualcomm CEO Paul Jacobs

Update: Qualcomm announced Wednesday that it has entered into a definitive agreement to acquire Atheros in a deal valued at $3.1 billion.

Original post: Qualcomm (s qcom) is reportedly in talks to buy Atheros (s athr), a rival wireless chipmaker in a deal valued at $3.5 billion, according to the New York Times. The paper cites sources close to the deal saying that it could be announced as soon as tomorrow. Qualcomm and Atheros could not be reached for comment. The deal would enable Qualcomm to move beyond its cellular technology base and into myriad other wireless technologies gaining ground in the home and in other networks such as smart grids. Atheros makes Wi-Fi, Bluetooth, HomePlug and several other wireless networking chips used in home routers, cell phones and set-top boxes.

Qualcomm has a history of buying smaller technology firms for their IP but this would be a unique deal in that Atheros is a larger, established silicon vendor (it would also be Qualcomm’s largest at the rumored price tag). For example to boost its WiMAX IP Qualcomm purchased Flarion, for MIMO assets it bought Airgo and for some Bluetooth technology it purchased the assets of RF Micro. However, Qualcomm is trying to get ahead of the puck as it were by picking up Atheros. Qualcomm’s expertise and fortunes have been made on the cellular networking side of the tech world, as it built chips for cellular networks and the brains inside cellular phones. But its core IP is around the 3G CDMA technology that will gradually decline in use as later generation cellular networks gain ground.

Qualcomm’s WiBro UltraMobile Broadband 4G standards effort and its MediaFLO mobile television efforts were both attempts to build and own the intellectual property around future cellular-style networks. But they didn’t pan out, so Qualcomm’s relying on its Mirasol display technology, a to-be-announced personal area networking technology and other smaller efforts to fill the coming CDMA revenue gap. Atheros buys it both a new revenue stream as well as technology that expands Qualcomm’s footprint deeper into the home and gives it more silicon inside mobile devices. Theoretically, Qualcomm could take Atheros’ silicon knowledge in Bluetooth and Wi-Fi, combine it with Qualcomm’s Snapdragon application processor plus cellular radio and put an entire cell phone on a chip.

For now, I’m making calls and will update the story I learn more. But for those in the wireless chip industry and smartphone business, this is a big deal. Qualcomm’s taking the Wi-Fi and mobility craze that Intel created all the way back in 2003 and seeking to own the silicon to make such an unwired lifestyle possible across phones, smart grid networks, home networks and even in sensor networks. Nice.

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