PMC-Sierra to acquire wireless chip firm

Communications chipmaker PMC-Sierra said today that it will pay roughly $125 million in stock to acquire the 92 percent of wireless semiconductor firm Datum Telegraphic it does not already own.

Burnaby, Canada-based PMC-Sierra said the Datum acquisition will allow the company to get into the market for next-generation, or 3G, wireless chips.

Although PMC-Sierra has historically not been involved in wireless networks, the increased flow of data makes the market attractive, PMC-Sierra chief executive Bob Bailey said in an interview.

"Our focus has always been broadband infrastructure," Bailey said. "In recent times, we're starting to see broadband infiltrate the wireless infrastructure."

In particular, Datum has a technology that allows one power amplifier to resend data for the three leading emerging standards for next-generation wireless data. Competing products require multiple amplifiers per system, PMC-Sierra said.

PMC-Sierra said it will issue about 681,000 shares of stock to acquire Datum; the deal is expected to close next quarter.

The acquisition is the latest in a string for PMC-Sierra. Two weeks ago, the company said it would exchange approximately 1.25 million shares of its stock to acquire the 85 percent of Malleable Technologies' equity it does not already own. Malleable makes a family of digital signal processors that are optimized to send voice data over Internet Protocol networks.

In March, PMC-Sierra announced deals to buy both AANetcom and Extreme Packet Devices.

Bailey said the need for wireless base stations will grow as more people access the Internet using wireless devices.

"That will create an explosion of demand for wireless bandwidth," he said.

Bailey said the company plans to focus on specialized wireless chips, though, and has no plans to offer the baseband chip offered by giants Lucent Technologies and Texas Instruments.

"This is enough for us for now," Bailey said, adding that PMC-Sierra also has no intention of getting into the market of making chips for the exploding cellular handset market.

PMC-Sierra was an early investor in Datum and had an option to buy the company if it reached certain technological milestones, which it met. Bailey said the first chips using Datum's technology should sample in the fourth quarter and go into volume production next year.