NetLogic Microsystems to acquire Optichron

SANTA CLARA, USA: NetLogic Microsystems Inc. has signed a definitive agreement to acquire Optichron, Inc., a privately-held, fabless semiconductor provider of 3G/4G LTE base station digital front-end (DFE) processors, located in Fremont, Calif.

Optichron’s breakthrough DFE technology enables unprecedented performance, signal bandwidth, spectrum maximization and power efficiency for next-generation LTE deployments requiring the highest data rates and lowest power consumption.

The acquisition of Optichron will expand and broaden NetLogic Microsystems’ footprint in 3G/4G LTE base stations by complementing NetLogic Microsystems’ market-leading portfolio of multi-core processors, knowledge-based processors and 10 Gigabit Ethernet PHY solutions. Optichron’s innovative DFE processors have been designed into next-generation base stations by multiple original equipment manufacturers (OEMs), and NetLogic Microsystems expects that the acquisition will accelerate Optichron’s technical leadership and product roadmaps in the advanced 40nm process node and beyond.

The exponential growth in mobile data traffic in the next five years, coupled with global spectrum scarcity, are forcing service providers and operators worldwide to push the limits on capacity and throughput for their limited spectrum. This is in turn driving a need for next-generation base stations that can support dramatically wider bandwidth, significantly more signal channels and more protocols (2G/3G/4G) in each band. Conventional DFE processing solutions typically support narrow bandwidths, a limited number of channels and a single protocol per signal band, and are therefore costly and inefficient for high-throughput base stations.

Optichron’s best-in-class DFE processors are highly differentiated and ideally suited to address these challenging LTE requirements. They deliver unparalleled performance of up to 5X increase in signal bandwidth and up to 9X increase in instantaneous bandwidth over available competing solutions, which dramatically improves 3G/4G LTE data rates.

In addition, Optichron’s breakthrough products enable the industry’s highest spectrum efficiency through the simultaneous processing of multiple signal channels per frequency band, as well as the multi-mode co-existence of 4G LTE, 3G and 2G protocols. This unique ability to support multiple signals and multiple protocols in a significantly wider bandwidth spectrum is enabling service providers to upgrade the performance and functionality of existing base stations without the time and costs associated with deploying new base stations or antennas.

Moreover, Optichron’s innovative DFE processors greatly improve the cost and power profiles of next-generation base stations by eliminating the need for costly and very power-hungry FPGA devices and conventional DFE solutions that are traditionally used to implement DFE functionality.

These processors from Optichron are the industry’s only intelligent self-adaptive DFE processors today that calibrate in real-time to real-world environments and variations, thereby accelerating and enhancing the manageability of LTE developments for Tier One original equipment manufacturers (OEMs). Optichron also delivers up to 80 percent better transmit power efficiency than available competing solutions, which results in significantly lower power consumption per megabits-per-second (Mbps) to enable OEMs to meet increasingly stringent power profiles in operator networks.

“Our combination with Optichron further solidifies our commitment to, and our increasing R&D investments in, the communications infrastructure market. DFE processors are an increasingly critical element of next-generation 3G/4G LTE common-platform base stations, and the combination of NetLogic Microsystems and Optichron further strengthens our technical leadership in this very exciting market,” said Ron Jankov, president and chief executive officer at NetLogic Microsystems. “We are very excited to welcome the Optichron team to the NetLogic Microsystems family. Optichron’s culture of strong engineering excellence having developed the industry’s most innovative, highly differentiated products creates a natural alignment with our organization.”

“As a clear technology and market leader in DFE processing, Optichron shares strong customer synergies in the 3G/4G mobile infrastructure with NetLogic Microsystems, and the combined company will have one of the most compelling and comprehensive product portfolios for next-generation base stations,” said Roy Batruni, co-founder and CTO of Optichron. “We are very pleased to join forces with NetLogic Microsystems and we believe as part of NetLogic Microsystems, we will be able to accelerate our innovation, technology leadership and product roadmaps.”

In connection with the acquisition, NetLogic Microsystems will pay the Optichron stockholders initial cash consideration of approximately $77 million upon the closing of the transaction. NetLogic Microsystems will assume approximately $22 million of restricted stock units for employees of Optichron who join NetLogic Microsystems following the close of the acquisition.

In addition, NetLogic Microsystems will pay the Optichron stockholders an earn-out upon the attainment of performance milestones through 2012 for the acquired business. If the maximum earn-out is achieved, an additional cash consideration of approximately $108.5 million would be payable by March 31, 2013, and, an additional consideration of $12.5 million would be paid in shares of NetLogic Microsystems common stock (valued approximately at closing date value), issued only to several Optichron employees, subject to their continued employment after the acquisition. The acquisition has been approved by both companies’ board of directors, is expected to close in the second quarter of 2011 and remains subject to customary closing conditions.