Cypress to buy Alation Systems in bid to complete Bluetooth portfolio

Cypress to buy Alation Systems in bid to complete Bluetooth portfolio
By Crista Souza, EBN
May 3, 2000 (10:01 p.m. EST)
URL: http://www.eetimes.com/story/OEG20000503S0056

Cypress Semiconductor Corp. today added a key piece to its wireless communications strategy, with a definitive agreement to acquire Alation Systems Inc., a developer of a Bluetooth-like high-frequency baseband technology.

The deal comes within a week of Cypress' bid to purchase RF engineering firm, RadioCom Corp (see April 27 story). Cypress intends to fold both entities into its USB microcontroller business to form a new unit, known as the Interface Products Division.

Together, the acquisitions open a range of application possibilities in the wireless arena, said Cathal Phelan, who was named vice president of the IPD.

"Cypress now has the software, hardware, analog, and manufacturing process expertise to create integrated solutions for multiple segments of the wireless business," Phelan said. "For example, we aim to produce integrated, cost effective silicon for Bluetooth for less than $7 per connection ."

According to Cypress, it now produces 99% of the bill of materials to enable a Bluetooth wireless connection between a cellular handset and a USB-enabled computer. The company plans to offer a fully integrated Bluetooth chip in 0.25-micron CMOS by the end of next year, said Dan McCranie, executive vice president of sales and marketing for Cypress, San Jose.

While RadioCom will contribute essential RF-circuit design know-how and radio technology, Alation will bring the ability to marry the radio with the baseband, and cover it all with software, McCranie said.

"The combination of RadioCom, Alation, and Cypress gives us all we need to produce the Bluetooth portion and front end of a cell phone," he said. "We also have RAMs, which are ubiquitous in basebands."

But Bluetooth is not just in cell phones. The high-frequency, short-range RF technology will also support in-home wireless LANs, which some refer to as personal area networks (PANs). Market watchers project the Bluetooth to drive over $ 1 billion in component sales by 2003, of which cell phones will represent less than 20%.

Alation, a privately held company based in Mountain View, Calif., has about 20 employees. Its annualized revenue of between $4 million and $8 million is derived from royalties on its intellectual property, which is designed into products being developed by Diamond Multimedia, National Semiconductor, and ST Microelectronics, among others, Cypress said.

The acquisition, which McCranie priced at under $50 million, will be accounted for as a pooling of interests. The deal is expected to be completed in a matter of weeks.