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National buys Algorex for DSP technology

Capitalizing on the craze for cell phones, the semiconductor firm agrees to acquire a company that specializes in designing digital signal processors for $21.5 million.

Tech Industry
Capitalizing on the craze for cell phones, National Semiconductor today agreed to pay $21.5 million to acquire Algorex, which specializes in designing digital signal processors.

Digital signal processors, or DSPs, essentially translate sound waves into signals than can be carried across digital networks, and vice versa. Demand for these processors, which serve as a nerve center for cell phones, has dramatically boosted revenues and profits for a number of companies, especially Texas Instruments.

Santa Clara, Calif.-based National will integrate Algorex's technology into its existing line of DSP processors, a representative said. Algorex largely has made its reputation for software, algorithms and chip designs for DSPs incorporated into wireless consumer devices such as digital cordless phones and wireless phones.

Enhancing its DSP focus fits into the company's overall strategy of moving away from PC silicon into making a greater variety of chips. Historically, National specialized in analog chips, processors which take sound, heat and light waves and turn them into digital data that can be interpreted by electronic devices.

In 1997, National and Cyrix decided to take on Intel in the market for PC processors. Price cutting and product delays, however, lead to massive losses.

Earlier this year, National sold Cyrix to Taiwan's Via Technologies to concentrate on other silicon components. Last week, the company surprised Wall Street by reporting higher-than-expected earnings of $70.4 million, excluding one-time after tax gains, for the second fiscal quarter ending Nov. 28. The profit followed six consecutive quarterly losses

"National envisions a world where personal and business information is accessible anywhere, anytime through a plethora of user-friendly information appliances," National CEO Brian Halla said in a statement. "With this acquisition, National now has all the advanced wireless technologies in place t to enable our customers to execute on this vision."

Algorex is based in San Francisco.

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