Update: Intel buying TI's cable modem business

SAN FRANCISCO — Intel Corp. has agreed to acquire Texas Instruments Inc.'s cable modem product line, the company said Monday (Aug. 16). Financial terms of the deal were not disclosed.

Intel (Santa Clara, Calif.) said it plans to combine TI's Puma product lines with the Data Over Cable Service Interface Specification (DOCSIS) standard technology and Intel SoCs to deliver advanced set top box, residential gateway and modem products for the cable industry. The objective is to provide cable OEMs with an open and powerful platform for delivering innovative and differentiated products to service providers that improve the video, voice and data content experience at home, the company said.

All employees of TI's cable modem team received offers to join Intel at sites in their home countries, primarily Israel, and will become part of Intel’s Digital Home Group, Intel said. The deal is expected to close in the fourth quarter, the company said.

Observers have in recent weeks said Intel was signaling that it was interested in re-entering the communications chip market. Earlier this month Will Strauss, principal analyst at Forward Concepts Inc., said Intel was the most likely buyer of Infineon's wireless business, which is now up for sale. Broadcom Corp. and Samsung Electronics Co. Ltd. are also considered potential suitors for Infineon's wireless group, which generated about $1.2 billion in sales last year, according to Strauss.

"Intel is buying TI’s cable modem solution in order to bolster its front-end cable set-top box solution," said Gary Mobley, an analyst with Benchmark Equity Research, in a report circulated Tuesday.

According to Gary Mobley, an analyst with Benchmark Equity Research, Intel has for years promoted its Atom processor as an alternative to RISC-based processors for the $3 billlion set-top box chip market. Mobley said Atom has captured a few STB wins, including Google TV and a few IPTV boxes, but that Broadcom Corp. and ST Microelectronics NV continue to dominate the space.

"While Intel gains a better front-end solution with its TI modem acquisition, several hurdles remain before Atom gains traction as a set-top box processor," Mobley said.

Makers of set top boxes like Motorola and Cisco have software and hardware teams trained to use RISC-based processors, Mobley said. Moving to a CISC-based processor like Atom would require them to reshuffle an ecosystem that they have spent years developing, Mobley said.