Qualcomm to buy Atheros for $3.1B

qualcommlogoSan Diego, Calif. — Qualcomm Inc. plans to buy Atheros Communications, Inc. (San Jose, Calif.), a provider of wireless and wired local area connectivity and networking solutions, for $3.1 billion. The acquisition is expected to help Qualcomm extend its technologies and platforms into new business markets beyond cellular.

Qualcomm has entered into a definitive agreement to purchase Atheros for $45 per share in cash. The transaction has been approved by the Qualcomm and Atheros boards of directors and is subject to customary closing conditions, said Qualcomm. The transaction is expected to close in the first half of 2011.

The acquisition will position the companies to compete with rival Broadcom Corp. in the consumer electronics market for wireless connectivity semiconductors, according to iSuppli, now part of IHS Inc.

Atheros’s main allure is its global leadership in low-power semiconductor solutions that support the 802.11n high-throughput wireless local area network (WLAN) standard, a type of Wi-Fi technology suitable for the transfer of bandwidth-intensive data such as video, said Francis Sideco, principal analyst, wireless communications for iSuppli, in a statement.

“While Qualcomm already has its own Wi-Fi technology, this deal bolsters its design capabilities and opens up more opportunities in non-handset devices such as tablets and consumer electronics devices, particularly those in the connected home,” Sideco added.

According to iSuppli, Broadcom currently dominates the market for wireless connectivity semiconductors for consumer electronics.

“Connectivity has arrived on the consumer electronics market in a big way — and no semiconductor supplier can seriously tackle this market without extensive system-on-chip (SOC) design capabilities, including a vast portfolio of intellectual property,” said Lee Ratliff, senior analyst, broadband and digital home, for iSuppli, in a statement.

“Broadcom is the gold standard in this area — the king of the SOC solution. With the acquisition of the Atheros portfolio, Qualcomm now is better positioned to offer SOCs that can compete with Broadcom’s offerings for a slice of the connected consumer electronics market.”

“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. This acquisition is a natural extension of that strategy into other types of devices,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm, in a statement.

Atheros’ current president and CEO, Dr. Craig H. Barratt, is expected to join Qualcomm as president of Qualcomm Networking & Connectivity.