Broadcom pays $3.7bn for NetLogic's mobile know-how

Wireless chip maker Broadcom has agreed to buy NetLogic Microsystems for a little under $4bn to get access to its range of processors, used in smartphones and tablets.

The $3.7bn (£2.3bn) deal — announced on Monday — is expected to strengthen Broadcom's product portfolio in its core areas, such as networking infrastructure, as well as in rapidly expanding markets, such as chips used in 4G mobile devices.

"With NetLogic Microsystems, Broadcom is acquiring a leading multicore embedded processor solution, market-leading knowledge-based processors, and unique digital front-end technology for wireless base stations that are key enablers for the next-generation infrastructure build-out," Scott McGregor, Broadcom's chief executive, said in a statement. "Broadcom is now better positioned to meet growing customer demand for integrated, end-to-end communications and processing platforms for network infrastructure."

While the California-based companies both operate in the resurgent semiconductor market, they have seen different levels of success over the last year. Irvine-based Broadcom posted strong results of $1.08bn in profits on revenue of $6.8bn for 2010, while Santa Clara-based NetLogic lost $66m on revenue of $382m during the same period.

The purchase follows Broadcom's acquisition of Beceem Communications in October 2010 for $316m. Beceem was the first company to deliver a chip that could support both LTE and WiMax standards, which provide download speeds of up to 200Mbps.

There has been a wave of acquisitions among chip companies as they look to consolidate their businesses and take advantage of a growing mobile market. In May, for example, Nvidia announced that it was buying UK-based baseband processor company Icera in what it described as a "key step in Nvidia's plans to be a major player in the mobile computing revolution".

The Broadcom-NetLogic deal, which has already been given the green light from both boards of directors, is expected to close in the first half of 2012.