Broadcom Pays $164 Million for Renesas 4G Wireless Chip Unit
Under terms of the deal, a team of chip designers based in Finland, the United Kingdom and India will become Broadcom employees, though the companies aren’t yet saying how many people are involved. Bob Rango, Broadcom’s executive VP and general manager of its mobile and wireless group, said the group of employees is largely composed of a batch of ex-Nokia chip designers who did some of the early work on setting 4G wireless standards. “This is a very experienced group of designers, many of whom were at the table when the 4G standards were set,” he told me.
Broadcom had previously been seen as lagging rivals like Qualcomm in the development of chips for 4G phones.
Renesas had announced that it would stop developing its 4G wireless in June. Rango said the chips are already certified for use by several carriers, including AT&T in the U.S.; Vodafone, Orange and EE in the U.K.; and NTT DoCoMo in Japan.
Broadcom said the deal will cut into non-GAAP earnings to the tune of 12 cents a share when Broadcom reports its results of the quarter ending Dec. 31. It also expects the acquisition will cut into its fiscal 2014 earnings by 10 cents to 15 cents on a non-GAAP basis, but that it will be accretive to earnings starting with the 2015 fiscal year.
The company also boosted its outlook for the quarter ending Sept. 30, saying it now expects to report revenue in the range of $2.075 billion to $2.175 billion, and for gross margins to rise as much as 10 basis points.
Broadcom shares rose in premarket trading by more than one percent, to $25.51 per share.