September 10, 2007 – Analog Devices Inc. has agreed to sell parts of its baseband chipset division to Taiwan’s MediaTek for $350 million in cash.
The deal covers ADI’s Othello radio and SoftFone baseband chipset product lines, as well as certain cellular handset baseband support operations, which together made up about 6% of ADI’s fiscal 3Q07 sales ($43 million) and 9% of ADI’s fiscal 2006 sales (~$230M). Without the unit, ADI says its 3Q gross margins would have been abut 1.7% better, operating margins 2% higher, and with an extra penny of EPS profits.
MediaTek will take on new business for radio transceiver and baseband chipset products, including GSM, GPRS, EDGE, WCDMA, and TD-SCDMA chipsets, plus about 400 product development and customer support workers. JiChang Hsu, GM of MediaTek’s wireless business, summarized that the additions will “bolster MediaTek’s global operations and development in converging consumer solutions.”
ADI, meanwhile, will still invest in wireless handset applications with high-performance analog, MEMS, and programmable DSP products, but this deal will enable the firm to refocus on areas more in line with its signal processing capabilities and with better profit potential, noted Jerald Fishman, ADI’s president and CEO. “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,” he said in a statement.