"This acquisition provides Lattice with a unique opportunity to accelerate our previously announced intention to enter the FPGA market," said Steven A. Laub, president of Lattice. "Agere's products are proven solutions that will complement our internal FPGA development effort. Agere also offers a deeply experienced and talented team capable of extending the technology and building the product portfolio."

The move also comes as Agere--formerly Lucent Microelectronics--is refocusing its chip business, cutting costs, and downsizing its operations. Last week, the Allentown, Pa.-based chip company said it was cutting 950 more jobs after announcing the elimination of 6,000 positions earlier this year.

"This sale is one of a series of actions Agere is taking to better position our business for long-term profitable growth," said Sohail Khan, executive vice president of Agere's Infrastructure Systems Group. "While FPGAs have been a strong business for us, we are redirecting our resources to areas where we can focus our skills on system-level integration for advanced communications applications. The business is a strong strategic fit with Lattice and we look forward to working with them to ensure a smooth transition for our customers."

The acquisition is expected to be completed in the first quarter of 2002. The transaction is expected to be accretive to Lattice's 2002 pro forma earnings before goodwill. As part of the transaction, about 100 Agere employees will join Lattice.

The transaction will include Agere's general-purpose ORCA FPGA product portfolio, its field programmable system chip (FPSC) series and all related software design tools. Lattice will also acquire certain intellectual property cores and patents that re unique to Agere's FPGA business. The FPSC series has been developed as an advanced system-oriented products, which combine generic FPGA logic with embedded cores dedicated to advanced communication protocols and high-speed input/output (I/O) functions.

Last month, Lattice's newly appointed president, Laub, disclosed plans for his company to enter into the FPGA market to compete against Altera Corp. and Xilinx Inc. Lattice has developed an FPGA architecture made up of so-called "variable-grain blocks." Laub said the entry into the FPGA business was a natural extension of Lattice's existing portfolio of complex programmable logic devices (CPLDs).

CPLDs are known for their deterministic timing and are used most commonly for control logic, FPGAs have higher logic density and are more suitable for the data plane. Many of Lattice's customers use both CPLDs and FPGAs in system designs.

Laub today said the Agere product line--in particular the FPSC series--will enable Lattice to penetrate key FPGA applications in communication systems. "Currently unmatched in our industry, this FPSC portfolio will immediately provide Lattice an important means of differentiation in the FPGA market," he said.