Cypress to pay $550m for Broadcom’s IoT assets

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Cypress Semiconductor is acquiring Broadcom’s IoT division for $550m in cash, including the WICED brand and the IoT-focused WiFi and Bluetooth assets, as well as the ZigBee and 6LoWPAN products.

The Broadcom IoT division comprises some 430 staff, and generated $189m in revenues in the past year. But the deal indicates that the new Broadcom wants to shed some of the low margin chips that will comprise the bulk of IoT shipment volumes. Since Avago acquired Broadcom and assumed its name, there has been an internal review of both firms’ products as part of a rationalization exercise to improve profits an focus.

Cypress is hoping the deal will strengthen its presence in key embedded markets, including automotive and industrial, as well as serving as the basis for future growth in wearables and smart home automation. Cypress acquired Spansion last year for around $4bn, adding a considerable amount of Bluetooth tech to its existing portfolio of low power chips.

In terms of the overlap between Broadcom and Cypress, there is apparently a non-compete clause in the deal, with both parties having agreed to a completion date somewhere in Q3. Cypress seems like a good home for the WICED range, as Broadcom didn’t show much zeal for pursuing the smaller devices in the IoT.

“Cypress is a significant player in the IoT today because of our ultra-low-power PSoC programmable system-on-chip technology, but we’ve only been able to pair it with generic radios so far. Now we have the highly regarded Broadcom IoT business—state-of-the-art WiFi, Bluetooth and ZigBee RF technologies—that will transform us into a force in IoT and provide us with new market opportunities as well,” outgoing Cypress CEO TJ Rodgers said. “What we bring to the party is over 30,000 customers worldwide who need advanced, ultra-low power wireless communication but only can absorb it in the form of an easy-to-use programmable embedded system solution.”

At the time of the Avago deal, although IoT was cited as a driver, the combined company’s only pure IoT offering was Broadcom’s WICED (wireless integrated connectivity for embedded devices) line of chips, which were essentially fusions of sensors with Bluetooth and/or WiFi acting as the communication link.

Targeted at mobile devices and wearables – which are arguably an extension of mobile devices and perhaps not pure IoT anyway – the WICED portfolio was the subject of a big launch but no large-scale public wins. The range includes support for Apple’s HomeKit, as well as ZigBee, 6LoWPAN and regular 802.15.4.

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Caroline has been analyzing and reporting in the hi-tech industries since 1986 and has a huge wealth of experience of technology trends and how they impact on business models. She started her career as a journalist, specializing in enterprise and carrier networks and in silicon technologies. She spent much of her journalistic career at VNU Business Publishing, then Europe’s largest producer of technology publications and information services . She was publishing director for the launch of VNU’s pan-European online content services, and then European editorial director. She then made the move from publishing into technology market analysis and consulting, and in 2002 co-founded Rethink Technology Research with Peter White. Rethink specializes in trends and business models for wireless, converged and quad play operators round the world and the technologies that support them. Caroline’s role is to head up the wireless side of the business, leading the creation of research, newsletters and consulting services focused on mobile platforms and operator models. In this role, she has become a highly recognized authority on 4G systems such as LTE and WiMAX, and a prolific speaker at industry events. Consulting and research clients come from major mobile operators, the wireless supply chain and financial institutions.

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