Broadcom Buys Bluetooth Chip Maker

Innovent's innovative use of Bluetooth technology may be the new standard of integrated wireless communications. The purchase solidifies Broadcom's leadership in the high-speed wireless arena, specifically the short-range market segment.

Cell phone companies LM Ericsson Telephone Co. and Nokia Corp. in Europe, as well as Intel Corp. and International Business Machines Corp. in the U.S have driven the acceptance of the Bluetooth standard in mobile communications devices.

Innovent's patent-pending implementation of RF technology in a digital CMOS integrated circuit process provides significant cost and manufacturing advantages for short-range wireless products. Manufacturer's can tap into the integration technology for as little as $5 a chip.

Bluetooth wireless technology provides a low-cost means for communication and networking between mobile phones and other portable devices, as long as line-of-sight is not an issue.

With the purchase Broadcom is free to develop product lines that combine RF, baseband, systems and software services that target Bluetooth applications running on Personal Area Networks and wireless Local Area Networks.

Dr. Henry T. Nicholas III, Broadcom president and chief executive officer said the Innovent acquisition demonstrated its intent to be a formidable competitor in wireless markets worldwide.

"Integrating Innovent's capabilities in CMOS RF and Bluetooth with our expertise in mixed-signal, home networking, high speed networking and broadband communications technologies provides Broadcom with a powerful platform to address the rapidly growing wireless marketplace," Nicholas said.

Broadcom has supported the California-based business through it seed investment stage and has had close ties with the company from Innovent's inception in 1999. Prior to the acquisition, Broadcom already owned approximately 13 percent of Innovent.

Dr. Henry Samueli, Broadcom co-founder and chief technical officer, said the long-term academic and working relationship between it and Innovent's co-founders enhances the synergy of the business deal.

"From our shared research roots at UCLA to a strategic investment partnership and now a merger of our businesses and top engineering talent, we believe the combined teams of both companies will continue to offer groundbreaking technology to an exploding marketplace in both wired and wireless communications," Samueli said.

While PANs are relatively new system set-ups, the technology that allows users to transfer information across multiple devices is rooted in wireless LANs.

Dr. William T. Colleran, Innovent president and chief executive officer, said the combination of the two companies make for a formidable force in wireless communications.

"The combination of Innovent's extensive experience in CMOS RF chip development and Broadcom's business and technical strengths in broadband communications will create unique, world-class solutions for the rapidly growing wireless product arena," Colleran said.

"Broadcom's market presence and business infrastructure will accelerate Innovent's ability to bring our Blutonium line of wireless chips to a market that is eager to implement this technology in real products," Colleran added.

According to research by eTForecasts, only 2 percent of the Internet users in the U.S. currently access the Internet with a Web appliance. But in the next five years the availability of portable appliances will dramatically change the marketplace.

By the end of 2005, eTForecasts predicts that 55 percent of Internet users in the U.S. will access the Web through handheld devices, in addition to PC Internet access for home use.

The same report predicts that worldwide Web appliances will have an even stronger impact on wireless access to the Internet. At the end of this year it's estimated that 6 percent of Internet users will access the Web through a portable device and that the market segment will grow to over 71 percent by the end of 2005.

eTForecasts anticipates that Web-enabled phones will be a major factor in driving the rapid growth of the market.

Dr. Egil Juliussen, eTForecasts analyst and author of the reports said this market shaft does not mean that the PC is dead, merely that user's want to take the Net with them, wherever they go.

"This does not mean the end of PCs as Internet access devices, but an increasing share of Internet users will augment their online life with web appliances," Juliussen said. "PCs will remain the leading Internet access device, especially for heavy-duty usage. By 2005 most Internet users will be accessing the web from both PCs and information appliances such as web cellular phones and web appliances."

Innovent and Broadcom have a number of product demonstrations scheduled for the Bluetooth Congress 2000 in Monte Carlo this week, including full wireless Internet web browsing incorporating video and audio streaming across a Bluetooth link implemented with Innovent's CMOS RF transceiver.

As a part of the deal, Broadcom will issue an aggregate of approximately 3 million shares of its Class A Common Stock in exchange for all outstanding shares of Innovent Preferred and Common Stock after exercising outstanding employee stock options.

The transaction is expected to close within 60 days as the boards of directors of both companies have approved the merger. Currently the deal must be approved by Innovent shareholders and in compliance with regulatory requirements and other customary closing conditions.


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