Cypress Semiconductor is buying the wireless Internet of Things (IoT) portion of Broadcom's wireless solutions group for $550 million in cash.
Simultaneous with the announcement, Cypress Semiconductor Corp. (NYSE: CY) said that CEO T.J. Rodgers, one of the longest-tenured executives in Silicon Valley, will be relinquishing his title this week.
The operation that Cypress is acquiring produces WiFi, Bluetooth and Zigbee chips. The unit generated $189 million in sales last year. The company said that picking up the operation beefs up its position in embedded markets where it already plays, and gives it a large boost in the consumer IoT market, including wearables and home automation.
"The robust, ready-to-scale WICED brand and developer network of module makers, value-added resellers (VARs), technology partners and ODMs who are already working with its technology will give us immediate revenue growth capability in new channels," Rodgers said. "Cypress will also bring these new technologies to the automotive market, where we are already No. 3 worldwide in microcontrollers and memories, and where the connected car boom has just started."
Cypress bought Spansion a year ago to add memories and microcontrollers for various embedded markets (including automotive). Being able to provide connectivity options gives the company the potential to control even more of semiconductor category in its customers' bill of materials.
As for Broadcom Corp. (Nasdaq: BRCM), even though it is divesting its IoT wireless operation, it will remain a force in wireless solutions. Not included in the sale is anything having to do with wireless connectivity for smartphones, computers, set-tops or WiFi access points.
Broadcom was simply looking for ways to raise cash. Since Avago bought Broadcom (and assumed the Broadcom name), it has been evaluating its product portfolio to identify operations it could divest to help pay down debt incurred with the merger.
Rodgers founded Cypress in 1982 and has run the company ever since. He is known equally for his brashness, libertarian views, and engineering skills. He invented the VMOS process (now rarely used) in 1975 while a student at Stanford, and continued to earn a slow steady stream of patents through 2006.
He is among the very last of his contemporaries still running a company. He acknowledged it might be time for new management, but apparently isn't ready to move on entirely; he will continue to work on special projects at Cypress.
"This March, Valeta and I celebrated my 68th birthday in Mexico," Rodgers said. "Upon reflection, while I am still passionately interested in Element 14, silicon, I have always planned not to be spending most of my time in the last decade of my career immersed in the details of the operations... And, to be completely candid, the board and even the executive staff have urged me to bring new blood into operations."
— Brian Santo, Senior Editor, Components, T&M, Light Reading