Macom Buys Applied Micro for $770M

Macom announced it is buying Applied Micro Circuits for about $770 million, paying out roughly 40% in cash and the balance in stock. Macom said its next step is to divest AppliedMicro's Compute business, any mention of which has already been scrubbed from the acquired company's home page.

Macom deems Applied Micro Circuits Corp. (Nasdaq: AMCC)’s Connectivity business to be "highly" complementary to its own product portfolio, specifically citing AppliedMicro's OTN framers, MACsec Ethernet networking components and especially AppliedMicro's PAM4 platform.

Given that Macom intends to sell the AppliedMicro Compute business that builds ARM-based processors (also for the data center market), it couldn't be clearer that the PAM4 platform is the key to the whole deal.

After all, Macom and AppliedMicro have been working together with that product as the focus of their collaboration for at least a year. In September, they announced they had integrated AppliedMicro's new DSP for PAM4 modulation with a Macom transimpedance amplifier (TIA) and a TFPS modulator from a third partner, BrPhotonics. The combined solution transmits data at 100Gbit/s over a single wavelength. The three claim they were the first to enable 400Gbit/s connectivity in a QSFP family of transceivers. (See ECOC: Satisfying the Need for Speed.)

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Assuming the technology works as advertised and delivers on the lower costs it promises, it has the potential to significantly boost data center performance at a price that many data centers are likely to find quite agreeable.

John Croteau, Macom president and chief executive officer, said the transaction will help the company insert itself more deeply in enterprise and cloud data centers. "Macom will now be able to provide all the requisite semiconductor content for optical networks -- analog, photonic and PHY -- from the switch to fiber for long haul, metro, access, backhaul and Data Center. AppliedMicro's 100G to 400G single-lambda PAM4 platform should perfectly complement MACOM's leadership in analog and photonic components for Data Centers."

As for AppliedMicro's Compute operation, Macom said several potential buyers have identified themselves and Macom believes it will be able to sell the unit within 100 days.

Macom said it expects to close the purchase of AppliedMicro in the first calendar quarter of 2017.

— Brian Santo, Senior Editor, Components, T&M, Light Reading