Cypress Semiconductor and Broadcom announced Thursday signing of a definitive agreement under which Cypress will acquire Broadcom’s Wireless Internet of Things (IoT) business and related assets in an all-cash transaction valued at US$550 million. Under the terms of the deal, Cypress will acquire Broadcom’s Wi-Fi, Bluetooth and Zigbee IoT product lines and intellectual property, along with its WICED brand and developer ecosystem.
Under the terms of the deal, Broadcom will continue to focus on its wireless connectivity solutions for the access and mobility segments that are not IoT related, including serving set-top box, wireless access, smartphone, laptop and notebook customers. Cypress will capitalize on the rapidly growing Wi-Fi and Bluetooth connectivity (17 percent per year) markets in consumer, industrial and automotive IoT segments.
Broadcom’s IoT business unit, which employs approximately 430 people worldwide, generated $189 million in revenue during the last twelve months. The acquisition strengthens Cypress’s position in embedded systems markets, such as automotive and industrial, and establishes it in the high-growth consumer IoT market, a segment that includes wearable electronics and home automation solutions.
The transaction, which has been approved by the board of directors of Cypress and Broadcom, is expected to close in the third calendar quarter this year, subject to customary conditions and regulatory approvals. Cypress expects the transaction to be accretive within a year of closing and to improve its gross margin, earnings and long-term revenue potential.
“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 Wi-Fi, Bluetooth and Zigbee RF technologies—that will transform us into a force in IoT and provide us with new market opportunities as well,” Cypress President and CEO T.J. 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.”
“We are thrilled to be joining forces with Cypress to address the fast growing IoT market,” Broadcom IoT General Manager Stephen DiFranco said. “With our IoT connectivity products, Cypress will be able to provide the connectivity; the MCU, system-on-chip, module and memory technologies; and the mature developer ecosystem that IoT designers require, creating an end-to-end portfolio of embedded solutions and a single IoT design platform.”
Research firm ABI Research predicted Wednesday that Bluetooth smart home devices will show a 75 percent growth rate between 2016 and 2021, though 802.15.4-based ZigBee and Thread will lead with 34 percent volume share of the home automation and 29 percent of the smart lighting markets by this time.
802.15.4 will also see growth in smart metering, building automation, industrial, and street lighting market, accounting for almost one third of 802.15.4 shipments by 2021.
A majority of fitness and activity trackers are utilizing Bluetooth Smart, with the solution extending to medical applications moving forward. It also promises significant opportunity for beacons across numerous verticals, such as retail and advertising, with ABI Research forecasting a 129 percent growth rate between 2016 and 2021. However, looking ahead there will be increasing competition in the connectivity sphere across numerous IoT verticals.