IRVINE, Calif. -- Broadcom Corp. here today entered the consumer-oriented Digital Subscriber Line (DSL) chip business by acquiring a small, fabless-IC design house called Element 14 Ltd. for about $600 million in stock.
With the acquisition of Element 14, based in Cambridge, England, Broadcom gains an entry into a consumer-oriented DSL technology called asymmetric DSL (ADSL). Element 14 is developing a high-port, chip-set designed for use in central-office applications in ADSL and related networks.
"We believe this acquisition will position Broadcom as a leader in the ADSL market," said Henry Nicholas III, Broadcom's president and chief executive. "Together our combined product lines will offer the most comprehensive portfolio for copper twisted-pair broadband delivery."
The move also propels Broadcom into a competitive but booming market. Also competing in the ADSL chip set market includes Alcatel, Centillium, GlobeSpan, Intel, Integrated Telecom Express, Lucent, PCTEL, Virata, STMicroelectronics, Texas Instruments, and several other suppliers.
It also gives high-flying Broadcom the missing piece in its broadband strategy. Until now, the company has focused its efforts on the rival broadband technology to DSL-cable modems. In fact, it is the world's leading supplier of chip sets for the booming cable-modem business.
Broadcom is no stranger to DSL, however. For some time, the company has been selling chips based on very-high-bit-rate DSL (VDSL) technology, a high-end, ADSL-oriented scheme that utilizes fiber-optic cabling to bring voice, data, and video into the home or business environment.
VDSL is in its infancy in the market, while ADSL is exploding, analysts said. In fact, carriers are struggling to keep up with demand for their ADSL services, they added.
Combined with Broadcom's position in home and enterprise networking, Element 14's technology will be used to develop standalone ADSL-enabled chip set products as well as integrated solutions for residential gateways and related products.
"Broadcom is already the market leader in VDSL and cable modems, and we are now positioned to provide every means of delivering broadband access to the home and business," Nicholas said. "Additionally, Element 14's world-class digital signal processor technology can be leveraged across all our businessunits."
Formed by former executives of Acorn Computers Ltd. in 1999, Element 14 is a fabless-IC design house with 68 employees. It is developing what is anticipated to be the industry's first 12-port, full-rate ADSL solution for the central office.
Financial terms of the acquisition were not disclosed.