Broadcom has agreed to sell off its wireless IoT business to semiconductor firm Cypress, in a deal worth roughly $550 million.

Hardware manufacturer Broadcom, now owned by Avago Technologies following a $37bn acquisition last year, will be selling off its IoT arm – including its wifi, Bluetooth and Zigbee product lines and intellectual property. The IoT business has begun generating revenue as the industry continues to grow, and has generated nearly $200 million in the past 12 months.

But the positive start to live notwithstanding, Broadcom has opted out of the IoT connectivity solutions market. It will continue to focus on its wireless connectivity solutions for mobile and fixed access and the mobility segments – which includes the set-top box, wireless access, smartphone and laptop product lines. Cypress has said it will run with the Broadcom IoT solutions suite in an attempt to capitalise on the growing wifi and Bluetooth connectivity markets, which Cypress says is growing 17% per year, citing IHS figures.

With Cypress focussing on programmable system-on-chip modules for IoT, it’s now looking to bolster its service with connectivity tech and create end-to-end component solutions.  T.J. Rodgers, CEO of Cypress, says the acquisition will make the company an IoT force.

“Cypress is a significant player in the IoT today because of our ultra-low-power PSoC programmable system-on-chip technology, but we’ve only been able to pair it with generic radios so far,” he said. “Now we have the highly regarded Broadcom IoT business – state-of-the-art Wi-Fi Bluetooth and Zigbee RF technologies – that will transform us into a force in IoT and provide us with new market opportunities as well. What we bring to the party is over 30,000 customers worldwide who need advanced, ultra-low-power wireless communication but only can absorb it in the form of an easy-to-use programmable embedded system solution.”

GM of Broadcom’s IOT efforts Stephen DiFranco echoed the sentiments of his Cypress counterpart, saying the integration with create everything that’s needed from an IoT design platform.

“With our IoT connectivity products, Cypress will be able to provide the connectivity; the MCU, system-on-chip, module and memory technologies; and the mature developer ecosystem that IoT designers require, creating an end-to-end portfolio of embedded solutions and a signle IoT design platform.”

The transaction has been approved by the board of directors of each company, and pending regulatory approvals will close in Q3 2016.