NVIDIA to acquire baseband processor developer Icera

GPU and chipset developer NVIDIA will acquire Icera, a developer of mobile baseband processors, under a US$367 million cash agreement announced today.

Icera develops baseband processors for 3G and 4G cellular phones and tablets, and has more than 550 patents granted or pending worldwide. Its wireless-modem products have been approved by more than 50 carriers across the globe.

“Adding Icera’s technology to Tegra gives us an outstanding platform to support the industry’s best phones and tablets,” said Jen-Hsun Huang, President and CEO of NVIDIA.

The acquisition will allow NVIDIA to offer the two main processors used in smartphones: the application processor and the baseband processor. According to the company, this will help OEM customers improve their time to market.

Icera’s baseband is software based, which according to NVIDIA means that manufacturers can develop multiple products from a common platform, reduce development costs, accelerate time to market and secure a route to support future baseband standards.

But Huang added that NVIDIA intends to continue relationships with its existing baseband partners, and respect its customers’ preferences in combining application and baseband processors.

“Both NVIDIA and Icera have highly complementary assets with no product overlap at all. Both companies are heavily focused on addressing the leading-edge device markets; NVIDIA with its Tegra 2 apps processors and Icera with its 3G/4G soft modem basebands,” said Sravan Kundojjala and Christopher Taylor, analysts at Strategy Analytics.

“We've assessed both Icera and NVIDIA's strategies and technologies in reports earlier this year and feel that both companies have a perfect set of assets to serve the high-end mobile device markets,” the pair said.

However, there are still holes in NVIDIA’s cellular strategy, according to the analysts: the “connectivity gap” in its product portfolio; the years it will take to integrate Icera’s technology into NVIDIA’s Tegra processors; and the number of price points NVIDIA must address in order to compete with Qualcomm, which currently fields the broadest range of processors to address various price points in this market.

The US$367 million cash acquisition has been approved by the boards of both companies and is expected to be completed in approximately 30 days, subject to customary closing conditions.

NVIDIA expects the transaction to be “slightly dilutive” on an operating basis through the first half of calendar 2012, and accretive on an operating basis in the second half of calendar 2012.

“This expectation does not take into account significant revenue synergies that the companies anticipate,” a statement from NVIDIA read.