As a part of the agreement, Scientific-Atlanta said it will purchase a minimum of 500,000 integrated circuits in 1999, and will use Broadcom as a key supplier of communications chips beyond its minimum purchase.
Broadcom's chips are used in sending video and data signals to and from SA's Explorer 2000 digital set-top box device. With the Explorer set-tops, cable companies will offer the ability to send and receive email and browse the Internet, and later, offer video on demand.
Scientific-Atlanta is one of the two largest suppliers of equipment to the cable industry. The company earlier this year said seven cable companies had ordered the Explorer set-tops, with shipments in 1998 pegged at fewer than 1 million devices, although that number is expected to grow in 1999. The cable companies announcing orders from Scientific-Atlanta offer service in 27 cities to around 20 million customers.
The Broadcom-SA deal also calls for the two parties to continue development of advanced communications chips. One of the stated goals is to reduce the physical count of chips used in the set-top boxes, thereby reducing their overall cost.
"Through the cooperative efforts of Scientific-Atlanta and Broadcom, we are working to integrate all of the communications signal processing functions for the Explorer 2000 digital set-top boxes into a single...device," Dr. Henry Nicholas, Broadcom's president and chief executive, said in a statement.