A Brief Outline of Broadcom’s Acquisition of Renesas

Broadcom Corporation, which is abbreviated as (NASDAQ: BRCM) is a global leader in semiconductor solutions both the field of wired and also wireless communication systems. Of late Broadcom Corporation has announced on 4th of Sept 2013 the agreement for the acquisition of LTE based assets from many affiliates belonging to the Japanese chip vendor Renesas Electronic Corporation.

This revolutionary state of the art acquisition is very likely to accelerate the availability of NASDAQ: BRCM’s very first multimodal carrier-validated dual core LTE SoC developed by Renesas Mobile early in the year of 2014.

Hence this state-of-the-art acquisition shall allow Broadcom Corporation to make use of the LTE SoC, which is ready for mass production as a carrier which has been validated by major global leading operators in Europe, North America and also Japan. Through this acquisition NASDAQ: BRCM is also acquiring the rights of receiving high-quality multiband, multimodal, HSPA/LTE-A/EDGE modem IP that encompasses support for its leading-edge features like VoLTE and also Carrier Aggregation.

This acquisition of Renesas with Broadcom also adds several quality patients and communication software applications to NASDAQ: BRCM’s IP portfolio, not to mention about the world’s most experienced engineers of cellular communication technology, who shall work with Broadcom after this subjected acquisition.

For this acquisition, Broadcom Corporation is expected to pay Renesas $ 164,000,000 (in approximation) in cash. Broadcom Corporation presently expects this accounts of purchase transaction to be dilutive to EPS (earning per share) on a non-GAAP scale by approx. $0.12 within the next 3 months ending with 31st Dec 2013. However the dilutive for the non-GAAP EPS for the full year of 2014 of NASDAQ: BRCM is expected to be anywhere in-between $0.10 to $ 0.15. All the commercial impact of this acquisition is presently evaluated on a non-GAAP scale, as GAAP acquisition costing which include potential restructuring charges and amortization of the bought up tangible assets are not estimated at this time. It has been publicly announced that this transaction shall be approved by the board of directors of Renesas Electronics and Broadcom Corporation and shall be customarily closed within the next three months by 31st Dec 2013.

So following the announcement of Intel and the famous technology giant Nvidia, Broadcom Corporation became yet another information technology firm to challenge the long term dominance of Cualcomm in the LTE baseband marketing zone.

After the acquisition of Renesas, Broadcom Corporation heralded its 1st LTE compatible baseband chip which is known as BCM 21892. This chip claims to be 35 percent smaller than all the other similar chips those that are available in the market. This technological marvel makes BCM 21892 as the telecom industry’s smallest LTE-4G chip available in the present market. This ultra-modern technologically advanced BCM 21892 chips are not only extra power efficient, but it is also much cheaper to produce. The company Broadcom Corporation has decided to showcase this chip at the Mobile World Congress Show, which is scheduled in Barcelona during the month of September 2013.

This 4G LTE modem along with NASDAQ: BRCM’s Broadcom GPS, NFC and Wi-Fi Bluetooth technology provide this manufacturing company with all comprehensive product range that is needed for manufacturing advanced mobile application devices. Broadcom’s selected customer base is now testing this 4G LTE modem, which is expected to run into mass industrial production by the first quarter of 2014.

This 4G LTE is considered as the future of wireless connectivity for all mobile devices especially in the field of smart phones.

The dominance of Qualcomm for the production of LTE chips has made Qualcomm lead the smart phone market all along.

It is assumed that LTE compatibility will also assist Broadcom Corporation to expand its reaches in the baseband markets; however, raising competition in this area also remains a significant threat for the company.

The sudden increase in global smart phone shipments has considerably increased and widened the cellular baseband territory over the years. Statistically speaking the first part of 2012 has seen a straight 15% increase in the baseband markets.

So of all the various other technologies those that are dominating the market in the recent times, LTE technology is visualizing to be the strongest growth as mobile carriers all across the world are shifting to this modern standards for wireless telecommunication protocols.

With the rapid increase of LTE networking applications, an increasing number of chip manufacturing companies are entering the telecommunication market. Nvidia along with Intel has of late introduced The Tegra 4 family which incorporates both built in 4G-LTE and also 3G telecommunication technologies. In order to build up a deep foray in the tablet and smart phone market, this production of Tegra 4 has been highlighted by Intel Corporation as its first multi-band and multi-mode LTE telecommunication chipset that has been launched during the first Broadcom's acquisition of Renesashalf of 2013.

Last but not the least, under the term of this acquisition deal between Broadcom Corporation and Renasas, a fantastic team of mobile chip developers based in India, Finland and United Kingdom shall also become a part of Broadcom Corporation’s employee. Though Broadcom’s HR representatives are still silent about this matter and are not willing to say how many peoples are involved in this hiring process, but Bob Rango, who is the General Manager and Executive VP of NASDAQ: BRCM, happily said that this group of employees are predominantly composed of a batch of ex-Nokia telecommunication chip designers who did some early path breaking works on setting 4G wireless standards all across the globe.

Rango also said that Renesas has already announced that their company will stop manufacturing 4G wireless telecommunication equipments in June 2014; however, the chips designed by Renesas have already been certified by many major global telecommunication carriers which also include AT&T in the US. Other than that EE, Vodafone and Orange has also certified these chips in the United Kingdom apart from NTT Docomo which is located in Japan.

Broadcom Corporation, which has been always recognized as a lagging rival of Qualcomm in the development of chipsets for 4G smart phones, shall surely pass its barriers now after this acquisition and shall surely lead the telecommunication chip business in the days to come.

Walt Smith

Walt is a writer and editor for GigleNetworks, a blog that discusses everything to do with networking technologies. He resides in sunny Florida with his wife and beautiful 2 children.

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