Broadcom to buy maker of 3G chip for phones

Chipmaker Broadcom on Wednesday said it has signed an agreement to acquire Zyray Wireless, whose technology helps existing cell phones use next-generation mobile communications standards.

Broadcom will issue 2.23 million shares of common stock, worth $96 million based on Tuesday's closing price, to buy all outstanding Zyray shares, the chipmaker said. Broadcom, which had previously invested $3 million in Zyray, expects the acquisition to close by Sept. 30.

Zyray produces a co-processor called Spinnerchip, which lets current-generation phones and data terminals offer third-generation (3G) mobile communications services.

The chip, based on the Wideband Code Division Multiple Access (W-CDMA) standard, complements Broadcom's single-chip processor, which supports diverse telecommunications standards such as GSM, GPRS and EDGE. Many handset makers are currently integrating Spinnerchip into new designs, Broadcom said.

W-CDMA technology provides high-speed mobile connectivity with data rates of up to 384kbps (kilobits per second), making possible advanced applications such as video telephony and messaging, graphics-rich sports and news clips, interactive gaming, location-based services and improved Web browsing. According to a recent Deutsche Bank Securities report, the worldwide W-CDMA market is expected to approach 200 million units by 2008, representing over a quarter of total handset sales.

Zyray is also working on HSDPA (high-speed downlink packet speed), which offers download rates of up to 10mbps, and "multiple input multiple output" (MIMO) technologies, the companies said.

The addition of Zyray's products and technologies will help Broadcom offer complete W-CDMA and HSDPA solutions and provide the company with the opportunity to add MIMO transceiver technology to a wide spectrum of mobile and wireless technologies, Broadcom said.