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Intel pays $70 million for TV assets

Chipmaking giant marches further into living room with purchase of Zarlink unit that makes television tuner tech.

In an effort to bolster its digital-home strategy, Intel on Friday announced plans to buy television tuner assets from Canada's Zarlink Semiconductor.

The chipmaking giant said it will purchase Zarlink's United Kingdom-based radio frequency consumer business, which manufactures demodulation and tuner technologies.

The technology, included in products like Zarlink's ZL10037 digital satellite tuner, converts analog broadcast, cable and satellite television signals into digital signals. It is expected to find its way into future versions of digital televisions, digital set-top boxes and digital media recorders, Intel said.

The deal will cost Intel $70 million--$68 million in cash and $2 million in other considerations. Though expected to close in the second half of November, it is subject to usual closing conditions.

Zarlink, a publicly traded communications chips designer based in Ottawa, said its U.K. subsidiary in fiscal 2005 generated $53 million in revenue as part of the $75 million reported by Zarlink's consumer communications unit.

Kirk Mandy, president and chief executive of Zarlink, said the company will continue to support its remaining consumer communications portfolio.

"The transaction also allows us to focus on the network communications, optical and ultra-low power marketplaces," Mandy said.

The purchase complements Intel's purchase earlier this year of Israeli semiconductor maker Oplus Technologies, a move that helped Intel replace its abandoned plan to offer a liquid crystal on silicon TV chip, the company said.

If the purchase goes through, Intel said Zarlink's demodulation and tuner technologies will be made into building block modules and sold to consumer device manufacturers similar to the Oplus MN 301, a system-on-a-chip processor.

The Zarlink technology will stay closely aligned with Oplus and Intel's plans for powering digital television devices, Intel spokeswoman Kari Skoog said, but the company may look at expanding the Zarlink technology to Intel's consumer electronics branding initiative, dubbed Viiv. Intel is positioning Viiv for home entertainment PCs in the same way that it has promoted its Centrino mobile technology for laptops.

Shares of Zarlink stock ended the day up 15.38 percent, or 20 cents, at $1.50. Intel stock rose 6 cents, to $23.82, at the end of trading.