Handset giant Samsung has acquired UK chipmaker CSR’s handset technology development business in a deal worth $310m. The acquisition is part of Samsung’s “complete platform strategy”, according to analysts, as the Korean vendor looks to cut its dependency on external silicon suppliers.
Samsung will get its hands on the team and technology behind CSR’s connectivity technology and a “large proportion of the resources” related to the chipmaker’s handset location technology. As a result, 310 CSR employees – primarily research and development staff – will transfer to Samsung.
While Samsung will not gain ownership of CSR’s legacy handset connectivity and location products, which the UK firm will continue to sell, it will gain a license to use the chipmaker’s intellectual property on a royalty-free basis, as well as 21 patents from the firm. Those patents will also be licensed back to CSR, again on a royalty-free basis.
In addition, Samsung has agreed to purchase a 4.9 per cent stake in the remaining CSR business, for $34.4m. Following the completion of the transaction, CSR intends to return up to $285m to holders of its ordinary shares.
CSR said that although it believes its location and connectivity team and technology is cutting edge, its presence in the handset market is too small to compete with larger rivals. The firm added that the deal allows it to focus and invest on its key growth areas including indoor location and Bluetooth Smart, the second wave of Bluetooth technology.
“This transaction will accelerate our transformation into a higher gross margin platform company operating in attractive growth markets where we have a leading market position. As a result, we will be a more competitive, more differentiated and more profitable business,” said Joep van Beurden, CEO of CSR.
According to Sravan Kundojjala, senior analyst at research firm Strategy Analytics (SA), every major mobile chipset company is now pursuing a “complete platform strategy” in order to minimise the costs incurred by sourcing technologies from third parties. He explained that the acquisition spells bad news for Broadcom and Qualcomm, from whom Samsung currently sources connectivity chips.
“Samsung currently lacks technology pieces such as connectivity integrated circuits (ICs), such as WLAN, Bluetooth, NFC, GPS and FM radio. It sources such ICs from Broadcom and Qualcomm,” explained Kundojjala. “CSR’s mobile division acquisition fills this connectivity chip portfolio gap for Samsung. Market leaders Qualcomm and MediaTek also pursued acquisitions to fill their connectivity chip portfolio gap.”
He added that, in SA’s view, Samsung now has all of the technology pieces to cover the entire mobile component value chain, except for the baseband and connectivity technologies.
“If Samsung acquires a baseband company, then its applications processor (AP) technology, which is a crucial chip in smartphones and tablets, will probably become attractive to other handset manufacturers,” added Kundojjala. “This latest move can help Samsung to build relationships with new OEMs. In addition, this acquisition also gives Samsung access to variety of markets beyond cellular devices.”
However, Mark Hung, research director for wireless at Gartner argued that although Samsung is filling some important gaps with this deal, there are still a number that remain
“Even with the wireless connectivity technology they are buying from CSR, there are still holes,” he said. “For a complete handset platform, you need wifi, Bluetooth, GPS and FM radio. This acquisition improves Samsung’s GPS capability; CSR probably still has the best GPS technology in the world. It’s Bluetooth technology is very good as well.”
“The key problem for Samsung is wifi. That’s the piece which CSR has struggled for many years to get working and, even today, the wifi/Bluetooth combo set that CSR has is not in production with any handset on the market.”
Samsung acquired a low-power WLAN company, Nanoradio, at the beginning of June, but Hung said that even this is not sufficient to complete Samsung’s portfolio.
“That company never shipped anything in volume either. So even with both of these acquisitions Samsung still does not have a very competitive mobile wifi chipset.”