Broadcom honed in on the digital TV market this week, spending $196 million to pick up the digital TV assets of AMD, namely a few ATI chipsets ‘ Xilleon, its NXT receiver chips and its Theater processor, and odds and ends that do motion compensation and frame rate conversion.
The statements about the acquisition are fairly bland, talking about being able to offer a range of chips at the top and low end of digital TV. We all think we know why AMD sold the division, and many investors think of it as a walking corporate corpse, although we have seen AMD in that state before, and it has a wonderful knack of getting itself out of financial difficulties. But why would Broadcom want this motley collection of chips?
Well they all seem to pick up on rising trends in the DTV market. The Xilleon includes a System-on-a-Chip which supports full HD for any of the global broadcasting standards, so it can work in devices designed for the US Europe, Japan and Korea and potentially one day China when its home grown technology is HD ready.
The Xilleon is described as having exceptionally powerful video pipeline and copes with HD deinterlacing, 3D comb filter, dynamic contrast, noise reduction, sharpness, and color control with a full audio subsystem. It is not a trivial piece of silicon and the device has 700 million transistors and is cut in an 80nm fabrication process.
The rest of the range is about the ATSC US broadcasting standard, also used in Korea and Mexico but pretty much nowhere else. The NXT range are ATSC receiver chips, while the Theater chips are a family of advanced QAM and VSB demodulators. Of course there will be a few million ATSC chips sold (around 30 million or more) over the next year or so in the run up to the digital switchover in the US, but also an extension of the ATSC standard, one using the 8VSB modulation scheme but adding mobile TV channels, is likely to lead to a mass US mobile TV chip in the very near future and perhaps this was one of the attractions of this old ATI unit to Broadcom. The chip can also work with cable QAM, which includes the new CableCard initiative which separates encryption from set top capabilities, another rising tide in DTV, but one that Broadcom already had ably covered.
ATI was acquired by AMD in July 2006 for $5.4 billion, mostly in cash, with some shares. It has recently led to AMD taking an investment impairment of $1.3 billion, as the goodwill in that transaction was re-evaluated. The main ATI business are PC and handset based graphics chips and graphics accelerators and boasts Nokia as a major customer, with its chips driving music playback, 3D gaming, mobile TV and video playback.
Another reason for Broadcom buying the DTV division of ATI is perhaps because one of its customers asked it to. One DTV manufacturer last quarter accounted for over 20% of revenues. It could have been that this or another large customer either wanted some of the ATI capabilities and the Broadcom designs on one device, or more likely it wanted its main supplier in safer financial hands. Broadcom will pay $192.8 million for the division, and will retain all of the 530 staff.
“The acquisition of AMD’s DTV business, which will become the core of Broadcom’s DTV line of business, will enable us to significantly scale and accelerate the completion of our digital TV product portfolio while also expanding our tier one customer base and positions us to achieve leadership and long-term growth in this important market segment,” said Daniel Marotta, Senior Vice President & General Manager of Broadcom’s Broadband Communications Group.
Meanwhile in an unrelated announcement Broadcom said that the Administrative Law Judge for the ITC has recommended that some key chips from SiRF Technology Holdings are banned from importation into the US. Broadcom is fresh from winning a patent dispute with SiRF at the hands of the ITC.
The affected products would include personal navigation devices (PND), GPS modules and receivers, personal digital assistants (PDA), and cellular telephones. The recommended remedy of ITC Administrative Law Judge Carl Charneski follows his Initial Determination earlier this month, in which he found that SiRF infringes six GPS-related patents held by Global Locate, now a wholly owned subsidiary of Broadcom. The final decision will not come until December. The lawsuit came about because SiRF sued Global Locate, which Broadcom acquired in July 2007.