Broadcom's Makeover Continues with MagnaCom Deal

The reported deal is the latest move by the company to reposition itself in the marketplace months after being bought by Avago for $37 billion.

Broadcom makeover

Broadcom continues to remake itself months after being acquired by Avago Technologies.

Since the $37 billion deal closed in February, Broadcom has since been renamed Broadcom Ltd. and officials have begun reshaping the company. Broadcom is selling off its Internet of things (IoT) portfolio and its wireless infrastructure backhaul business while continuing to expand its reach in such areas as 5G networking and the data center.

Most recently, the company reportedly is buying Israeli startup MagnaCom, which develops technology for future 5G networks. MagnaCom has developed a new modulation technology called WAM that officials are pushing to become a foundational element of 5G. Modulation represents a method for transferring data wirelessly using a carrier wave.

According to reports in Israeli media, Broadcom will pay between $50 million and $60 million for the six-year-old company, which also has an office in California and has about 20 employees. The Globes news site said a MagnaCom spokesperson confirmed the acquisition. A Broadcom spokesperson declined to comment.

On the MagnaCom Website, officials said WAM can be used in a range of applications, from cellular and WiFi to satellite and cable TV, wireless backhaul, cable and DSL modems, and long- and short-haul fiber. It can be used by telecommunications carriers, handset makers, wired and wireless systems OEMs and communications technology vendors to build products that can save spectrum, reduce power consumption and increase bandwidth, speed and distance.

The company has 15 patents and more than 50 others pending for WAM, which officials said is challenging QAM as the modulation technology for advanced wired and wireless systems.

The planned acquisition of MagnaCom is the latest move by Broadcom as the company looks to adapt in a rapidly evolving chip space. Avago's acquisition of Broadcom was one of a number of acquisitions in the market, which also includes NXP Semiconductors' $12 billion purchase of Freescale and Intel's $16.7 billion acquisition of Altera. With Freescale, NXP was able to expand its reach in such areas as the Internet of things (IoT) and autonomous vehicles, which was evidenced this week by NXP's unveiling of a connected car platform that includes a compute engine called BlueBox.

Through the Altera deal, Intel acquired the company's field-programmable gate arrays (FPGAs), programmable chips that can be used as accelerators for servers and other data center systems. In addition, CEO Brian Krzanich has shifted Intel's focus to the IoT and 5G connectivity while looking to reduce its dependence on the contracting PC market and the company's struggling efforts in the mobile device space.

For their part, Broadcom officials look to be focusing more of their attention on connectivity as it continues to reshuffle its product portfolio. In late April, the company sold its wireless IoT business to Cypress Semiconductor for $550 million. The business includes everything from WiFi, Bluetooth and ZigBee products to the WICED brand.

Broadcom in 2013 launched its WICED (Wireless Internet Connectivity for Embedded Devices) portfolio for the IoT and wearable devices to give OEMs a platform on which to build their devices. The company also had a WICED (pronounced "wicked") software developer kit.

Outgoing Cypress President and CEO T.J. Rodgers at the time said the company would be able to pair its programmable system-on-a-chip (PSoC) technology with Broadcom's "IoT business—state-of-the-art WiFi, Bluetooth and Zigbee RF [radio frequency] technologies—that will transform us into a force in IoT and provide us with new market opportunities as well."

Earlier this month, officials with MaxLinear, which makes radio frequency (RF) and mixed-signal integrated circuits for cable and satellite broadband communications, said the company was buying Broadcom's wireless infrastructure backhaul business for $80 million in an all-cash deal.

MaxLinear Chairman and CEO Kishore Seendripu said in a statement that the acquisition of Broadcom's business was part of MaxLinear's effort to "aggressively look for opportunities to accelerate the penetration of our leading analog and mixed-signal technology platform into the wireless infrastructure, data-center, metro and long-haul telecommunications, and cable infrastructure markets."

Since the close of the acquisition by Avago—which assumed the Broadcom name—the company also has made several product announcements, including a new dual-channel 5GHx WiFi access point platform and the volume production of its series of StrataGX BCM5871 communications processors, which are 64-bit chips based on the 2GHz ARMv8 Cortex-A57 designs.