Qualcomm to Acquire Wi-Fi Specialist Atheros

Qualcomm has entered into an agreement to purchase chip maker Atheros for US$3.1 billion, or $45 per share, in cash, the company said on Wednesday.

The transaction has been approved by the Qualcomm and Atheros boards of directors and is expected to close in the first half of 2011, Qualcomm said in a statement.

By acquiring Atheros, Qualcomm is hoping to help expand the use of its products beyond cellular networks, according to Qualcomm. The company’s strategy is to continually integrate additional technologies, including LTE (Long Term Evolution) and HSPA+ (High-Speed Packet Access), into mobile devices. The acquisition of Atheros will extend that strategy into other types of devices, it said. Compared to mobile broadband, Wi-Fi is used in a wider array of products, including game consoles and media players.

Atheros is most well-known for its Wi-Fi chipsets. But the company also makes components for other technologies, including Bluetooth, Ethernet and GPS. For example, on Monday, the company announced a power-efficient combination of chips for Bluetooth and IEEE 802.11n Wi-Fi, which can be used in notebooks, netbooks, desktops and tablets.

The Wi-Fi market has experienced healthy growth lately, a growth that Qualcomm will be able to tap into if the acquisition is approved. Worldwide wireless LAN equipment revenue grew 14 percent sequentially in the third quarter of 2010 to $680 million, continuing a trend of positive growth from the market, according to market research company Infonetics Research.

Also, the use of Wi-Fi hotspots will continue to grow in the next couple of years. Worldwide annual hotspot connects, or sessions, amounted to more than 2 billion by the end of 2010, and are anticipated to grow to over 11 billion by 2014, according to market research company In-Stat.

Because today’s smartphones are expected to be equipped with an ever growing number of wireless and mobile networks, the more integrated they are with each other, the easier and more cost efficient it becomes for vendors to implement them.

Atheros’ CEO Craig Barratt is expected to join Qualcomm as president of its Networking & Connectivity division.

Atheros’ shareholders and regulatory bodies now have to approve Qualcomm’s acquisition.

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