Qualcomm To Buy Atheros For $3.2 Bn

Qualcomm Inc plans to buy Atheros Communications Inc for roughly $3.2 billion in cash, showing its determination to become a major player in supplying chips for smartphones and tablet computers. Qualcomm is clearly betting the deal will beef up its position in mobile devices, a market expected to explode in 2011 with new tablet computer offerings to compete against Apple’s iPad.

Qualcomm is already a major player in making microchips that handle data crunching and voice communication in phones. But until now, it has made less progress on its own in developing chips tablet PCs that incorporate advanced networking functions. With Atheros, it is buying a key producer of chips used in WiFi, bluetooth and ethernet networking, along with GPS systems. Its chips appear in a suite of electronics devices, including networking equipment, personal computers, mobile telephones, mobile gaming devices, televisions and printers.

The company’s two biggest customers are Hon Hai Precision Industry Co. and Nintendo Co., according to its most-recent annual report. Others include Apple Inc, Dell Inc, Hewlett-Packard Co. and Microsoft Corp.

Daniel Amir, an analyst with Lazard Capital Markets, pointed to three positives in the deal for Qualcomm: It could become a “big combo chip player in the handset or tablet” market; it gets access to Atheros’ strong customer line-up; and it quickly gets a shot to expand into new markets, including home networking.