Broadcom to Acquire Zyray Wireless Inc.

IRVINE, Calif. and SAN DIEGO, June 16 /PRNewswire-FirstCall/ -- Broadcom Corporation, a leading provider of highly integrated semiconductor solutions enabling broadband communications, today announced that it has signed a definitive agreement to acquire Zyray Wireless Inc., a leading provider of baseband co-processors addressing WCDMA (Wideband Code Division Multiple Access) mobile devices. Zyray's SPINNERchip(TM) co-processor enables third generation (3G) mobile communications technology to be easily added to current generation phone handsets and data terminals, complementing Broadcom's existing EDGE/GPRS/GSM mobile products with a cost effective WCDMA solution.

Zyray's SPINNERchip technology, which is currently being integrated into several handset designs, enables data device manufacturers to bring true 3G phones to market rapidly. Pairing the SPINNERchip technology with Broadcom's single-chip EDGE/GPRS/GSM and GPRS/GSM baseband processors enables two-chip WCDMA multi-mode phones in the near term and provides the potential for future solutions with enhanced integration.

WCDMA technology provides high-speed mobile connectivity with data rates of up to 384Kbps (kilobits per second), enabling new applications such as video telephony and messaging, graphics-rich sports and news clips, interactive gaming, location-based services and improved web browsing. As cellular phones emerge as the dominant platform for media convergence, these new applications will help cellular carriers maintain and increase average revenue per user (ARPU). According to a recent Deutsche Bank Securities, Inc. market report, the worldwide WCDMA market is expected to approach 200 million units by 2008, representing over one-fourth of total handset sales.

In addition to WCDMA technology, Zyray is currently developing HSDPA (High Speed Downlink Packet Access) functionality for integration into its next generation family of devices. HSDPA is the next step in the cellular evolutionary path after WCDMA and is expected to provide data rates of up to 10 Mbps in the downlink. Zyray is also developing MIMO (Multi-In, Multi-Out) transceiver technology that can significantly improve the performance of WCDMA and HSDPA. MIMO refers to radio links with multiple antennas at the transmitter and receiver to improve the performance of wireless connectivity. These techniques have broad applicability in several wireless and mobile technologies.

"We see significant activity in the WCDMA handset space, and having Zyray's products and technologies in-house gives us the flexibility of offering our customers the ability to manufacture both low-cost EDGE phones as well as higher functionality WCDMA handsets," said Robert Rango, Group Vice President of Broadcom's Mobile & Wireless Group. "Zyray also enhances Broadcom's technology portfolio with valuable intellectual property in the HSDPA and MIMO areas."

Broadcom offers a broad portfolio of mobile communications baseband processors, reference designs and cellular software protocol stacks, including the Broadcom® BCM2132 EDGE mobile multimedia processor, BCM2121 GPRS processor, and ML2011 GSM processor. The addition of Zyray's products and technologies will enable Broadcom to offer complete WCDMA and HSDPA baseband solutions and provide Broadcom with the opportunity to add MIMO transceiver technology to a broad spectrum of mobile and wireless technologies. Broadcom's proven expertise in mixed-signal and CMOS RF also enables the delivery of complete wireless, local and personal area network (WAN/LAN/PAN) solutions for mobile data communications with compelling size, cost and performance benefits.

"With its EDGE products certified on the AT&T Wireless and Cingular networks, Broadcom is an ideal partner for our SPINNERchip technology, enabling us to provide mobile phone OEMs with immediate access to a next- generation technology coupled with a broad range of products already in use," said Werner Sievers, President and CEO of Zyray. "We expect to see our combined products play a major role in driving the adoption of smaller, lower power 3G mobile phones, significantly increasing the availability of WCDMA handsets and enabling exciting new mobile applications."

The Zyray co-processor connects to existing EDGE/GPRS/GSM baseband processors via a standard memory interface, significantly simplifying multi- mode phone development while allowing manufacturers to capitalize upon their previous technology development investment. The Zyray architecture implements WCDMA functionality as a configurable set of hardware accelerators, rather than as software running on a general purpose digital signal processor (DSP), thereby enabling improved performance and lower power while retaining the ability to software-optimize the product. Future versions of the design are intended to handle up to 10Mbps in support of HSDPA.

"With EDGE proliferating in North America and WCDMA gaining traction in Europe and Asia, we expect these technologies to dominate the cellular landscape going forward," said Neil Strother, Sr. Analyst from In-Stat/MDR. "Handset manufacturers are looking to silicon vendors for support of the full spectrum of WCDMA/EDGE/GPRS/GSM cellular standards to accommodate carriers who are aggressively moving to deploy next generation technologies."

In connection with the acquisition, Broadcom will issue or reserve for issuance approximately 2.23 million shares of its Class A common stock (with a total value of approximately $96 million based upon the NASDAQ National Market closing price on June 15 of $42.84 per share) in exchange for all outstanding shares of Zyray capital stock and upon exercise of outstanding employee stock options and other rights of Zyray. In addition, Broadcom previously invested $3 million cash in convertible notes of Zyray that will be canceled without repayment in connection with the acquisition. A portion of the total consideration paid will be subject to escrow pursuant to the terms of the acquisition agreement. The merger transaction is expected to close during Broadcom's third fiscal quarter, which ends September 30. The boards of directors of both companies have approved the merger, which awaits approval by Zyray's shareholders and the satisfaction of regulatory requirements and other customary closing conditions. At closing, Broadcom expects to record a one- time charge for purchased in-process research and development expenses related to the acquisition. The amount of that charge has not yet been determined.

About Zyray Wireless

Zyray Wireless develops the SPINNER(TM) family of WCDMA semiconductor products for 3G mobile devices. SPINNERchip is an add-on WCDMA baseband processor that enables handset manufacturers to develop single-mode WCDMA, dual-mode GPRS/GSM & WCDMA and tri-mode EDGE/GPRS/GSM & WCDMA devices in a cost effective, low risk and time efficient manner. The SPINNER solution incorporates Space-Time Processing (STP) technology that provides improved data-rate throughout the cell coverage area and increased network capacity.

About Broadcom

Broadcom Corporation is a leading provider of highly integrated semiconductor solutions that enable broadband communications and networking of voice, video and data services. We design, develop and supply complete system- on-a-chip (SoC) solutions incorporating digital, analog, radio frequency (RF), microprocessor and digital signal processing (DSP) technologies, as well as related hardware and software system-level applications. Our diverse product portfolio addresses every major broadband communications market and includes solutions for digital cable and satellite set-top boxes; high definition television (HDTV); cable and digital subscriber line (DSL) modems and residential gateways; high-speed transmission and switching for local, metropolitan, wide area and storage networking; home and wireless networking; cellular and terrestrial wireless communications; Voice over Internet Protocol (VoIP) gateway and telephony systems; broadband network and security processors; and SystemI/O(TM) server solutions. These technologies and products support our core mission: Connecting everything®.

Broadcom is headquartered in Irvine, Calif., and may be contacted at 1-949-450-8700 or at www.broadcom.com.

Safe Harbor Statement of Broadcom Corporation under the Private Securities Litigation Reform Act of 1995:

All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward- looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

Important factors that may cause such a difference for Broadcom in connection with its planned acquisition of Zyray Wireless Inc. include, but are not limited to, the risks inherent in acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, costs and unanticipated expenditures, changing relationships with customers, suppliers and strategic partners, potential contractual, intellectual property or employment issues, accounting treatment and charges, and the risks that the acquisition cannot be completed successfully or that anticipated benefits are not realized; general economic and political conditions and specific conditions in the markets we address, including the volatility in the technology sector and semiconductor industry, trends in the broadband communications markets in various geographic regions, and possible disruption in commercial activities related to terrorist activity or armed conflict in the United States and other locations; the rate at which our present and future customers and end-users adopt Broadcom's and Zyray's technologies and products in the markets for mobile communications devices; delays in the adoption and acceptance of industry standards in those markets; our ability to scale our operations in response to increases in demand for our products and services; the availability and pricing of third party semiconductor foundry and assembly capacity and raw materials; the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory; competitive pressures and other factors such as the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our respective products; our ability to retain and hire key executives, technical personnel and other employees in the numbers, with the capabilities, and at the compensation levels needed to implement our business and product plans; fluctuations in the manufacturing yields of our third party semiconductor foundries and other problems or delays in the fabrication, assembly, testing or delivery of our products; the risks of producing products with new suppliers and at new fabrication and assembly facilities; the loss of a key customer; our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a timely manner; the timing of customer-industry qualification and certification of our respective products and the risks of non- qualification or non-certification; the volume of our product sales and pricing concessions on volume sales; the effects of new and emerging technologies; changes in our product or customer mix; intellectual property disputes and customer indemnification claims and other types of litigation risk; problems or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration; the quality of our products and any remediation costs; the effectiveness of our expense and product cost control and reduction efforts; the risks and uncertainties associated with our international operations, particularly in light of recent events; the effects of natural disasters, public health emergencies, international conflicts and other events beyond our control; the level of orders received that can be shipped in a fiscal quarter; and other factors.

Broadcom's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release speak only as of this date. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

Broadcom®, the pulse logo, Connecting everything®, the Connecting everything logo and SystemI/O(TM) are trademarks of Broadcom Corporation and/or its affiliates in the United States and certain other countries. Bluetooth® is a trademark of the Bluetooth SIG. Zyray®, Zyray Wireless®, SPINNER(TM) AND SPINNERchip(TM) are trademarks of Zyray Wireless Inc. Any other trademarks or trade names mentioned are the property of their respective owner.