What's picoChip's Exit Strategy?
The mobile chipset market remains red hot, with U.K.-based femtocell startup
Picochip becoming the latest vendor to attract attention as a target for takeover as it preps for a possible IPO in 2012.
Rumors began to surface last week that the residential femtocell company was in talks of a sale, but it hasn't been clear who the buyer might be. A number of chipmakers would be interested, given the heightened industry focus on dual-mode Long Term Evolution (LTE) and HSPA+ silicon. (See Picochip Preps Base Station on a Dongle, Picochip, Wavesat Interoperate on LTE , AirHop, picoChip Scale Back to 3G and Challengers Shake Up LTE Chips .)
One limiting factor could be the price tag, considering the startup has raised more than $100 million in venture capital. But its work with big names such as Alcatel-Lucent (NYSE: ALU), AT&T Inc. (NYSE: T), Cisco Systems Inc. (Nasdaq: CSCO), SK Telecom (Nasdaq: SKM) and Vodafone Group plc (NYSE: VOD) make picoChip a desirable commodity. (See picoChip Raises $20M, Ships 1M Chips.)
An IPO next year is still the plan of record, according to picoChip VP of Marketing Rupert Baines. The public offering market for mobile technology is growing again, and the young company is easily the startup leader in femtocells, claiming to have 80 percent of the femto market locked up.
But, picoChip could still be shopping itself around in case it can drum up a better offer. Baines says he isn't privy to takeover talks, but he did say if the price is right, picoChip investors may be open to a deal. (See PicoChip Bags $20M, Plans IPO.)
There's no shortage of potential acquirers, even if it's difficult to spot a perfect match. (See .) MWC 2011: Betting on the Next Chip M&A Deal
Intel Corp. (Nasdaq: INTC) has Infineon Technologies AG (NYSE/Frankfurt: IFX) and the scale to do residential chips on its own, but the company is looking to get deeper into LTE small cells. Infineon may not be moving fast enough for Intel, making picoChip an attractive addition. (See Intel Looks to Infineon for the Full SOC.)
Qualcomm Inc. (Nasdaq: QCOM), like Intel, is large enough to front the cash, but it already makes its own LTE pico chips. (See .) CTIA 2010: Qualcomm Snags First Femto Wins
Cavium Inc. (Nasdaq: CAVM), picoChip's partner, has been on a buying streak, but it has Wavesat Inc. 's smarts to work with. (See Cavium, Picochip Team Up.)
Texas Instruments Inc. (NYSE: TXN) knows the baseband market and has a powerful ally in Ubiquisys Ltd. , so it wouldn't necessarily need picoChip's help. (See TI Muscles In on Small Cells .)
picoChip competitor Broadcom Corp. (Nasdaq: BRCM) is entrenched in the residential femto market, having already snatched up Beceem Communications Inc. and Percello Ltd. The company has a definite interest in the residential femtocell market, and its buying binge may not be over yet. (See Broadcom vs. Qualcomm Goes Femto , Broadcom to Buy Femto Chip Startup for $86M and Broadcom to Buy a 4G Strategy Via Beceem.)
Nvidia Corp. (Nasdaq: NVDA) just bought Icera Inc. , which strengthened its integrated chipset play enough to make a picoChip acquisition seem unlikely. (See Nvidia Targets Qualcomm With Icera Buy and Mobile Baseband Market Couples Up.)
MediaTek Inc. (Taiwan: 2454) has its own baseband smarts, but would seem more likely to buy GCT Semiconductor Inc. , picoChip's Korean foil.
Other vendors like Marvell Technology Group Ltd. (Nasdaq: MRVL) and NetLogic Microsystems Inc. (Nasdaq: NETL) may have the interest, but not the funds to buy up a cash-infused startup like picoChip. The startup is rumored to want at least $300 million to sell out, although Baines wouldn't comment on an exact number.
— Sarah Reedy, Senior Reporter, Light Reading Mobile