LAS VEGAS—Qualcomm Inc. will acquire rival wireless chip vendor Atheros Communications Inc. in a cash deal worth roughly $3.1 billion, the companies said Wednesday (Jan. 5).
The deal, first reported by the New York Times Tuesday, has been approved by the Qualcomm and Atheros boards of directors and is subject to customary closing conditions, including regulatory approvals and the approval of Atheros' stockholders, the companies said.
"It is Qualcomm’s strategy to continually integrate additional technologies into mobile devices to make them the primary way that people communicate, compute and access content," said Paul Jacobs, chairman and CEO of Qualcomm, in a statement. "This acquisition is a natural extension of that strategy into other types of devices."
The acquisition of Atheros will put Qualcomm (San Diego) in a position to integrate full connectivity features such as Bluetooth, WiFi and GPS into its SnapDragon processors, according to Gary Mobley, an analyst with The Benchmark Co. "Also, having a full WiFi product portfolio would help [Qualcomm] in 4G basebands given that spectrum usage in 4G is more analogous to WiFithan cellular technologies," Mobley said.
According to Mobley, if Qualcomm can integrate full connectivity features into its Snapdragon processors it could cut into sales of rival Broadcom Corp.'s combo chips, including the BCM4325 used in Apple Inc.'s iPhone and other products. But such an integration strategy by Qualcomm would take years to evolve, Mobley added.
The acquisition of Atheros by Qualcomm may also have a negative impact on MIPS Technologies Inc., according to Mobley, because Atheros makes chips based on MIPS cores, while Qualcomm uses cores from MIPS rival ARM Holdings plc. "As often the case, the dominant processor architecture used by the acquirer takes precedent," Mobley said.
Paul McWilliams, editor of the tech investment research newsletter Next Inning Technology Research, said the most significant impact of the deal would be on rival wireless chip vendors Broadcom and Marvell Technology Group Ltd.
Under the terms of the deal, Qualcomm will pay Atheros shareholders $45 for each share, a price premium of about 20 percent from where Atheros' stock traded Tuesday before the New York Times broke the story. The acquisition is expected to close in the first half of 2011, Qualcomm said.
Atheros President and CEO Craig Barratt is expected to join Qualcomm as president of Qualcomm Networking & Connectivity, Qualcomm said.