Under its $475 million acquisition, TI, the largest maker of chips used in digital cellular phones, plans to expand its digital signal processors (DSP) and analog chips across all 2.5- and third-generation wireless standards, such as CDMA, IS-2000 and their offshoots, said Bob Carl, TI's wireless computing unit manager.
TI is moving aggressively to stay on top of one of the hottest markets in tech. The wireless industry is expected to grow to more than 1 billion subscribers by 2002, according to Dataquest.
"It's a huge market, and it's about to explode," Carl said. "And we want to offer a breadth of choices across all standards. We want to be standards agnostic."
With third-generation (3G) technology, wireless device users will be able to send and receive data from their cell phones to handheld computers, whereas second-generation technology is strictly voice. PMC Sierra, for example, is also looking to beef up its 3G infrastructure, with the company announcing yesterday it acquired a 3G infrastructure company.
Analysts note that TI holds nearly 70 percent of the second-generation market among DSP chip makers. Competitors such as Lucent Technologies, Motorola and Analog Devices are hoping to unseat TI as the industry shifts to 3G.
DSPs, which account for the bulk of TI's revenue, are used to process digital audio and video data, allowing them to be sent across networks efficiently.
Carl, however, contends TI will retain its position given recent deals it has struck with cell phone giant Nokia and electronics powerhouse Sony, which will both use its DSPs in future wireless phones. The wireless industry expects to begin deploying 3G phones beginning next year.
Dot Wireless is the latest of three acquisitions TI's wireless unit has launched since last year, when it acquired ATL Research in Denmark to develop such features as email and Internet access for cell phones. TI also snapped up Butterfly VLSI of Israel, a radio-frequency chipmaker.
The acquisitions are part of TI's aggressive overall growth strategy. For example, TI last week announced acquisitions of Burr-Brown, a maker of chips that convert analog signals into digital, and Alantro Communications, a wireless high-speed telecommunications networking company.
The company has also been posting strong financial performance, beating analysts' first-quarter estimates last April. Driving the 69 percent jump in profits was the surge in wireless communications.
That's quite a change from 1996, when the company was posting steep losses and looked to cut its work force by thousands by offering early retirement.