Qualcomm Acquires Atheros for $3.1 billion

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The worlds of cellular and Wi-Fi communications are about to get a whole lot closer.

Mobile silicon technology vendor Qualcomm (NASDAQ: QCOM) today announced its intention to acquire Wi-Fi silicon vendor Atheros (NASDAQ:ATHR) in a deal valued at $3.1 billion. Qualcomm will pay $45 for each Atheros share and the deal is expected to close in the first half of 2011.

With the acquisition of Atheros, Qualcomm adds extensive local wireless connectivity technologies including Wi-Fi and Bluetooth. The acquisition serves to highlight the continuing convergence of wide and local area wireless networking technologies as mobile devices continue to proliferate.

“This acquisition makes sense on a lot of levels,” Paul Jacobs, chairman and CEO of Qualcomm said during a conference call announcing the deal. “From a vision standpoint, we believe that communication capabilities will go into more and more devices in the world around us.”

Jacobs noted that after the close of the deal, Atheros will become known as Qualcomm Networking and Connectivity (QNC) and current Atheros President Craig Barratt will continue to lead the division.

Steve Mollenkopf, executive vice-president and group president of Qualcomm noted during the call that the acquisition of Atheros is part of the strategy to move into silicon beyond cellular. Mollenkopf added that Qualcomm expects that the Atheros acquisition will enable them to grow a platform business in consumer electronics as well as networking and computing.

“Our strong portfolio of products historically focused on modems and integrated application processors for cellular,” Mollenkopf said. “That will be supplemented with Atheros wireless LAN, Ethernet, Bluetooth, GPS and powerline solutions.”

Qualcomm is seeing a trend emerge where cellular, computing and consumer electronics mobility are beginning to converge. Mollenkopf noted that with tablets, vendors have been pulling in technologies from both the PC and cellular worlds. He added that with a tablet there are more things that a user needs to be able to connect with, than what a phone typically connects to.

The two companies aren’t strangers either. Qualcomm and Atheros have had a working partnership for the last five years.

“We have had a long standing integration relationship where the two teams have worked together to deliver products on a common platform,” Mollenkopf said. “At this point in terms of timing, we see the industry changing rapidly and we thought that this is the time to create a leadership position. I think it’s very good timing for us.”

Mollenkopf added that Atheros and Qualcomm have worked together on common reference designs as well as on software integration. Moving forward, both Atheros and Qualcomm see continued areas of innovation and opportunity as the need for mobile connectivity grows.

“With the Internet of things, there will be many more connected devices,” Craig Barratt, Atheros CEO and President said on the call. “Many will use local area technologies, some will use wide area technology, provided we have the right level of technology and capabilities to enable them.”

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.