Samsung buys chipmaker CSR’s mobile location technology
SAMSUNG Electronics Co has bought chipmaker CSR Plc's mobile phone connectivity and location technology for $310m in a deal that strengthens the South Korean company's smartphone platform and patent portfolio.
CSR's chief executive Joep van Beurden said the British firm's Bluetooth, WiFi and location technology was cutting edge, but it was losing ground in smartphones to bigger rivals who were combining more functions in a single platform.
"There is a big war going on between the giants of thesemiconductor industry like Qualcomm Inc, Intel and Samsung LSI to deliver the complete solution intosmartphones," he said in an interview on Tuesday.
"Our team and technology - location and connectivity - is in its own right an extremely important part of that platform, but it is even more important if it completes your product offering and that is exactly what Samsung is doing."
Shares in the Cambridge-based group closed up 33pc at 295p after reaching a 12-month high of 302p in the session, as analysts welcomed CSR's exit from handset chips.
"Disposing of the handset business where CSR has been struggling to remain competitive looks to be a good move," said Singer Capital Markets.
However, the deal sent shares in chip rival Broadcom Corp down 3pc to $29.85 in Tuesday trading on Nasdaq as some investors worried that a combined Samsung and CSR would eat into Broadcom's business.
Bernstein analyst Stacy Rasgon said the deal would be "most negative for Broadcom" because it is a very large supplier of chips to Samsung.
Samsung said the deal would add more capability to its platforms featuring the application processors that power the world's most popular smart phones and tablets - Apple Inc's iPhone, iPad and its own Galaxy products.
"By leveraging CSR's R&D capability, Samsung will strengthen its application processor platform and solidify its position as a leading semiconductor solutions provider," said Stephen Woo, Samsung's president of System LSI Business, Device Solutions.
Brian Park, semiconductor analyst at Tong Yang Securities, said that up to now Samsung's growth in the mobile sector was driven by its strength in memory chips.
"With this development, Samsung has set up a foundation to bolster its non-memory capabilities," he said.
"Access to CSR's patents could also serve as a buffer in future patent disputes."
Samsung and Apple are waging legal battles in about 10 countries, accusing each other of patent infringement as they vie for supremacy in the mobile device market.
The company tops the mobile apps processor market in terms of revenue, controlling 72pc in the first quarter, followed by Texas Instruments Inc with 12pc and Qualcomm with 9pc, according to data from Strategy Analytics.
CCS Insight analyst Geoff Blaber said Samsung's move came hot on the heels of the acquisition of Nanoradio, a Swedish WiFi chip set company, on June 1.
"It underlines Samsung's commitment to strengthening its vertical advantage by extending silicon capability most notably in WiFi and GPS," he said.