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Intel Snares TI's Cable Modem Business

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Intel Corp. (Nasdaq: INTC) shook up the Docsis world today with a deal to acquire Texas Instruments Inc. (NYSE: TXN)'s cable modem product line, a category that includes chipsets that power a new breed of Docsis 3.0-powered data modems, voice modems, and home networking gateways.

Intel isn't disclosing financial terms of the deal, but the purchase will put more competitive pressure on one of Intel's chief rivals, Broadcom Corp. (Nasdaq: BRCM), which has been battling with TI on the Docsis chipset front for more than a decade. (See Intel to Buy TI's Cable Modem Unit.)

The purchase offers yet another clear indication that Intel has gotten serious with a cable strategy as MSOs and its suppliers start to develop more advanced Docsis-based devices that enable whole-home networking and the co-mingling of voice, data, and video services.

Among recent activity, Intel has been starting to target upcoming cable multimedia gateway devices with its Atom CE4100, a new media processor for digital TVs, DVD players, and "advanced set-top boxes." That chip, due out sometime next year, is designed to be backward-compatible with the CE3100, a processor that Intel's been using to run some recent tru2way set-top/gateway demos that leverage the Vividlogic (now SeaChange International Inc. (Nasdaq: SEAC)) tru2way middleware stack. Comcast Corp. (Nasdaq: CMCSA, CMCSK) is one of the MSOs already committed to use boxes that rely on Intel's system-on-chip (SoC) technology. (See Will Intel Go Inside Cable Multimedia Gateways? , SeaChange Snags VividLogic for $12M, and Intel Goes Inside Cable... Again.)

Intel didn't go into much detail in the announcement, but did note that it indeed plans to combine TI's "Puma" Docsis chip product lines with Intel's Atom-based SoC processors that, the chipmaker hopes, will serve as the foundation of a range of CE devices, including TVs, set-tops, and Blu-ray players.

"The objective is to provide cable OEMs (original equipment manufacturers) with an open and powerful platform for delivering innovative and differentiated products to service providers that improve the video, voice and data content experience in the home," Intel said.

Intel said it has offered all employees of TI's cable modem team to join Intel at sites in their home countries, primarily Israel. A TI spokeswoman says TI employs about 40 in its cable division. Those who take the option will join Intel's Digital Home Group when the deal closes, expected sometime in the fourth quarter of 2010.

In TI, Intel is acquiring a cable modem specialist that has been integral to the development of Docsis technologies all the way to its current version, Docsis 3.0. Intel got off to a faster start with Docsis 3.0 as its chips powered the first wideband modems to be certified by CableLabs , starting off with gear modems that used a minimum configuration of four bonded upstream and four downstream channels. It surpassed more than 1 million D3 chipsets shipped back in January 2009. TI declined to provide any updated D3 shipment figures. (See Broadcom Breaks Docsis 3.0 Barrier and Broadcom: Sub-$50 Docsis 3.0 Modem in Sight .)

Broadcom and TI have since developed configurations that bond up to eight channels, including some products that allow some channels to be set aside for cable video services. As multimedia, video-focused gateways enter the picture, future chipsets are expected to bond 16 or 32 downstream channels -- enough capacity for MSOs to simulcast their broadcast video lineups in IP format. (See TI Flexes Docsis 3.0 Muscle .)

Bridge to the video gateway
The purchase certainly gives Intel a chair at the Docsis table, but it makes even more strategic sense for the chip giant now that cable operators are proposing to collapse video, data, and voice into a single gateway device, says Jeff Heynen, directing analyst of broadband video at Infonetics Research Inc.

The gateway concept "plays into Intel's strength with video chipsets and PC processors and [enhances it] when combined with TI's experience on the DSP side as well as with modem chipsets," Heynen says. "The timing is good because the refresh of [Docsis] CPE to add in those video capabilities is for the late stages of next year, and will likely take off in 2012 and beyond."

Heavy Reading senior analyst Alan Breznick thinks the deal will be "a real shot in the arm for the old TI unit and re-galvanize its efforts in the broadband chipset space."

He echoed that the deal will also position Intel for the next wave of home-side cable gear.

"And it should spur the development and deployment of Docsis set-top boxes and multimedia gateways, as well as the introduction of Docsis into more standard CE products," Breznick says. (See Gateway to (Video) Heaven?)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:26:39 PM
re: Intel Snares TI's Cable Modem Business

Given that just 40 of TI's employee base was dedicated to this business, it wasn't a huge piece of TI's biz and, on its own, won't put a dent into Intel's either.  But Intel is clearly buying this to rev up its broader video gateway initiatives.  And it sets things up for a big battle between Broadcom and Intel in the next phase of cable chip war.  JB

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