Motorola Inc. (NYSE: MOT) has today finally made the move everyone in the ultrawideband (UWB) silicon market expected, acquiring the assets of chip designer XtremeSpectrum Inc. (XSI) (see Motorola Goes Ultrawideband).

Both companies are reluctant to disclose specific details of the deal, although unconfirmed industry scuttlebutt claims that it's essentially a forced sale due to financial difficulties at XtremeSpectrum. Sources say Motorola provided XSI with a bridge loan last summer so that it could make payroll, and that conditions attached to the loan gave Motorola the rights to acquire the startup for “peanuts.” XSI has raised a total of $42 million in its five-year history.

When questioned over the loan last week, XSI refused to confirm or deny its existence. “I can’t comment on what’s going on from a financial perspective,” said Chris Fisher, the normally loquacious XSI vice president of marketing. Motorola Ventures failed to return calls.

As recently as last week Fisher said that XSI was part way through a $20 million to $25 million funding round that he expected to close before the end of the year (see UWB Attracts VC Cash). Meanwhile, sources say that Motorola has been showing XSI PowerPoint slides -- with the XSI logo blacked out and replaced with the Motorola logo -- to potential ultrawideband chipset customers.

The acquisition is especially significant in light of the machinations surrounding the Institute of Electrical and Electronics Engineers Inc. (IEEE)’s work on an ultrawideband radio standard that will be capable of 110 Mbit/s over a distance of 10 meters using the 3.1GHz to 10.6GHz frequency band.

The IEEE today starts a week-long series of ultrawideband standardization meetings in Albuquerque. Ultimately, standards-compliant UWB chipsets are expected to be preferred over Bluetooth and 802.11 wireless LAN for certain wireless applications in consumer electronics devices, in view of their low price, low power requirements, small form factor, and high data rates.

Going into this week’s meetings, the standardization process appears stalled (see UWB in Limbo), with the vote split 40 percent in favor of the Motorola-backed proposal and 60 percent in favor of a proposal from the MultiBand OFDM Alliance (MBOA). This time around, however, both sides are hopeful of making progress (see Nokia Gets Ultrawide).

Steve Turner, ultrawideband business development manger at Texas Instruments Inc. (NYSE: TXN) -- a core member of the MBOA -- says the stalemate is due to delaying tactics that are now causing general annoyance throughout the industry.

“XSI mounted a filibuster in Singapore [the last IEEE ultrawideband meeting] and has just wasted so much time and money. Their tactics were really intended just to block us,” he comments. “What they want is to be able to say that they are formally part of the IEEE process at the next Consumer Electronics Show" (in Las Vegas in January 2004).

Motorola and XSI claim to be way ahead of their rivals in terms of product development, stating that XSI’s chipset, which is “designed to achieve 100 Mbit/s data rates while consuming less than 200 milliwatts of power,” has already sampled to “several leading consumer equipment manufacturers.”

— Gabriel Brown, Research Analyst, Unstrung