Taiwan’s fabless semiconductor supplier MediaTek, Inc. has signed a definitive agreement to acquire the assets related to the Analog Devices’ Othello radio and SoftFone baseband chipset product lines, as well as certain cellular handset baseband support operations, for approximately $350 million in cash. Based on fiscal year 2006 financial results, these product lines represented approximately $230 million in revenue for ADI.

The boards of directors of both companies have approved the transaction, which is expected to close near the end of 2007, following the satisfaction of regulatory requirements and other
customary closing conditions.

Through this acquisition, MediaTek's wireless handset division gains: a global team of approximately 400 experienced product development and customer support professionals; an established customer base around the world; new radio transceiver and baseband chipset products, including GSM, GPRS, EDGE, WCDMA, and TD-SCDMA chipsets, to further strengthen its existing portfolio; and key patents and intellectual property to increase MediaTek's competitiveness. As per Forward Concepts’ Wireless/DSP market bulletin, MediaTek also gains an architectural license for ADI’s Blackfin DSP employed in the SoftFone product line.

According to ADI, it plans to continue to invest in the wireless handset market by focusing on developing high-performance analog, micro-electro mechanical systems (MEMS), and programmable digital signal processing (DSP) products that enhance the audio, video, connectivity, and power efficiency capabilities in a range of wireless multimedia devices.
According to Jerald G. Fishman, ADI's president and CEO, "This transaction will allow ADI to focus its resources in areas where our signal processing expertise can provide unique capabilities and earn superior returns. In addition, it unlocks the value of the Othello and SoftFone operations by creating the scale needed to support the R&D investment required for sustainable, long-term success."

"With these added resources, our customers will be assured a roadmap of innovative solutions supported by a talented team that is focused on the needs of the wireless handset industry, said JiChang Hsu, general manager of MediaTek's wireless business. Moreover, he added, this acquisition will also bolster MediaTek's global operations and development in converging consumer solutions."

According to market research firm Forward Concepts, MediaTek is the largest Taiwan-based merchant chip supplier with annual revenue of about $1.7 billon. The supplier has risen rapidly in the cellular chip market to capture 10% of the 2006 $3.4-billion GSM/GPRS baseband market (ahead of NXP, Agere, and AnalogDevices), stated Forward Concepts. The firm estimates that it also captured 10% of the $1.8-billion GSM/GPRS transceiver market (ahead of NXP, Renesas, RFMD, TI and Skyworks). Additionally, Forward Concepts’ report projects that 40% of MediaTek's 2007 sales will be cellphone chips, including its newly introduced GPS and DVB-H chips.