Broadcom to Acquire NewPort Communications, Targeting the Highest Growth Segments of the Optical Communications Market
Acquisition Adds OC-48 and OC-192 SONET Transceivers, Framers, Serial 10 Gbps Ethernet and the World’s Highest Speed SerDes Technology for the Optical Communications Market
IRVINE, Calif. – August 14, 2000 – Broadcom Corporation (Nasdaq: BRCM), the leading provider of integrated circuits enabling high speed broadband communications, today announced that it has signed a definitive agreement to acquire NewPort Communications, Inc., a privately held company based in Irvine, California. NewPort Communications develops high-performance optical communications chips, which enable the rapid build out and bandwidth expansion of the fiber-optic infrastructure necessary to support the explosive growth of the Internet.
The acquisition is a key step in advancing Broadcom’s strategic initiative to provide end-to-end IC solutions that increase the performance, intelligence and cost-effectiveness of broadband communication networks worldwide. This merger will provide Broadcom with the broadest offering of CMOS optical communications technologies for the next generation of Synchronous Optical Network/Synchronous Digital Hierarchy (SONET/SDH) and 10-Gigabit Ethernet networks. Specifically, Broadcom will be able to offer optical communications OEMs and laser module suppliers with a broad portfolio of optical and Wide Area Network (WAN) infrastructure products, including transceivers, framers, communications processors and high-speed serial interface devices.
NewPort Communications has achieved design wins and strategic relationships with a number of the top-tier optical infrastructure suppliers. Cisco, Lucent, and Sumitomo are strategic investors in NewPort Communcations and are presently among its largest customers. Other top-tier customers include Alcatel, Ciena, and JDS Uniphase.
NewPort has achieved major industry milestones by introducing the world’s first single-chip 2.5 Gigabit-per-second (Gbps) OC-48 transceiver in July 1999 and the world’s first 10 Gbps CMOS OC-192 transceiver solution in May 2000. These devices offer substantially higher levels of integration and lower power than competitive Gallium Arsenide, Bipolar or Silicon Germanium solutions. The unique implementation of these ultra-high speed transceivers in standard CMOS process results in the lowest power and cost-per-port, thereby enabling higher port density systems, such as Dense Wavelength Division Multiplexing (DWDM), and integration of the transceiver into the laser module, as well as higher levels of silicon integration of the transceiver with large ASICs, such as framers, intelligent routers, and packet processors.
NewPort’s highly integrated and low power system-on-a-chip solutions are ideal for high port count communications systems, such as DWDM transport equipment. NewPort’s products allow the economic scaling of the future DWDM equipment by reducing the power consumption and footprint required for each port, resulting in an increase in port density.
Broadcom announced the world’s first single-chip 10-Gigabit Ethernet Coarse Wavelength Division Multiplexing (CWDM) CMOS transceiver in May 2000, and is currently developing Serializer/Deserializer (SERDES) technology to speed up the backplanes of next-generation Local Area Network (LAN) and WAN systems. The addition of NewPort’s products complements Broadcom’s product portfolio and enables Broadcom to offer complete end-to-end solutions for both the LAN and the WAN.
The explosive growth in Internet traffic demands a 10X increase in network bandwidth every two years. As a result, the trunk capacities of Internet backbone equipment will increase from two channels of OC-48 (2.5Gbps) today to more than 80 channels of OC-192 (10Gbps) in 2003. In metropolitan networks, the trend is strongly toward 10-Gigabit Ethernet. According to the Dell’Oro Group, 10-Gigabit Ethernet remains at the forefront of integration between the LAN, Metropolitan Area Network (MAN) and WAN. The NewPort acquisition further reinforces Broadcom’s capability to capitalize upon the upcoming convergence of the LAN and WAN infrastructure, and the accelerated port shipment growth associated with it. The Gartner Group forecasts the total available market for WAN optical networking chips to grow to over $1.3 billion in 2001.
"Today’s announcement reinforces Broadcom’s strategic initiative to provide end-to-end solutions across the LAN and WAN," said Dr. Henry T. Nicholas III, President and CEO of Broadcom. "The acquisition of NewPort Communications and its SONET/SDH expertise is not only synergistic with our 10-Gigabit Ethernet technology but is also complementary to the communications processor technology that we are acquiring through our merger with Silicon Spice Inc., announced on August 7. Together these acquisitions will provide Broadcom with a powerful platform to address the rapidly growing wide area networking marketplace."
"The combined capabilities and resources of NewPort and Broadcom will bring the most complete system solutions to the optical communications marketplace," said Dr. Armond Hairapetian, President and CEO of NewPort Communications. "Broadcom’s market presence and proven ability to deliver innovative, cost-effective silicon solutions and NewPort’s complementary intellectual property and talented engineering pool together promise to speed up the timetable for delivering complete solutions for MAN and WAN networks."
In connection with the acquisition, Broadcom will issue in aggregate about 5.5 million shares of its Class A Common Stock in exchange for all outstanding shares of NewPort’s Preferred and Common Stock and upon exercise of outstanding employee stock options, warrants and other rights of NewPort. The merger transaction is expected to close within 60 days and will be accounted for under the purchase method of accounting. The boards of directors of both companies have approved the merger, which awaits approval by NewPort’s shareholders and the satisfaction of regulatory requirements and other customary closing conditions. Broadcom expects to record a one-time write-off for purchased in-process research and development expenses related to the acquisition in its third fiscal quarter (ending September 30).
About NewPort Communications
NewPort Communications, Inc., founded by Dr. Armond Hairapetian and Lorenzo Longo in 1996, supplies mixed-signal integrated circuits for the high-speed communications market. The Company’s business objective is to develop highly integrated single-chip solutions that enable economic scaling of the existing bandwidth capacity of today’s fiber-based networks. For more information, visit www.newportcom.com.
See BRCM website press release. |
