ATI buys cable modem chip biz for $14m

Extending digital TV product line

By Tony Smith • Get more from this author

Posted in Financial News, 9th February 2005 10:25 GMT

ATI took a further step into the digital TV market yesterday when it announced it will acquire a third-party cable modem chip design operation.

The deal will see US-based Terayon Communication Systems sell its cable modem silicon intellectual property to ATI for $14m in cash. ATI also said it will hire two dozen Terayon designers who are now surplus to their current employers' requirements.

ATI's thinking is that the acquisition will put it in a better position to pursue digital TV opportunities, selling TV makers not only graphics and image processing technology but the silicon they need to integrate cable access into the box, alleviating the need for a separate set-top box.

ATI claims to have shipped over 5m digital TV chips last year to many of the major manufacturers in the field. It said its Theater and NXT demodulators have 85 per cent share of the market, while its Xilleon MPEG decoders have a 40 per cent share of the US 'digital cable ready' arena, although it did not provide a source for these statistics.

Meanwhile, Terayon has shipped more than 3m of its TJ 700x family of cable modem chips worldwide - proof, said ATI, that Terayon's designs are suitable "field-proven".

ATI will pay $6.95m when the acquisition is completed, with the remainder following once "certain conditions, including completion of certain deliverables", have been met. ®