Samsung has made a big investment in mobile connectivity and location
services, buying the relevant development operations and technology from
venerable UK chipmaker CSR.
The $310m (£198m) purchase is mainly a play for future technology, as
CSR gets to hang onto its existing Bluetooth, GPS, Wi-Fi and NFC
connectivity products and the associated revenues. According to a statement
on Tuesday, Samsung will get "all of the resources devoted to the
development of [CSR's] handset connectivity technology and a significant
proportion of the resources dedicated to the development of handset
location technology, including 310 employees together with certain
associated fixed assets".
Crucially, given Samsung's role in the mobile patent wars,
the deal also comes with a chunk of intellectual property: 21 US
patents and their international versions, and a perpetual and global
licence for CSR's remaining patents.
CSR, meanwhile, will refocus its business as a result of the deal. The
company will continue to develop location-related technology, but only
for its specialised area of indoor navigation. Apart from that, CSR will work in the voice and music, automotive entertainment, imaging and Bluetooth Smart markets.
"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," CSR chief Joep van Beurden said in the
statement. "As a result, we will be a more competitive, more
differentiated and more profitable business."
Shares boost
Van Beurden also noted that the deal would "unlock material value" for
CSR's shareholders. By this, he meant they will get a big payout — $285m
of the $310m will be returned to shareholders. This is good news for
CSR's shareholders, particularly after the poor performance of the
company's share price in the last couple of years.
That performance — a more than 50-percent drop since February 2010 — was
partly down to the failure of CSR's digital TV system-on-a-chip (SoC)
attempts. The company pulled out of that market late last year, shedding hundreds of jobs along the way.
However, the Samsung deal seems to have already had a huge effect,
sending CSR's share price up by 39 percent at the time of writing, on
early morning trading alone.
Bluetooth business
CSR, or Cambridge Silicon Radio as it used to be known, made its name in
the mobile connectivity business. It was the first company to put a
Bluetooth radio on a mobile chip, and it benefited hugely
from Bluetooth's ensuing ubiquity. The fact that it was part of the
same 'Silicon Fen' cluster as ARM, the company whose architecture powers
just about every mobile phone in existence, did not hurt.
The company will not really be leaving the Bluetooth business with the
sale of its mobile development operations to Samsung. One of the areas
it will hang onto is that of Bluetooth Smart, a low-power subset
of Bluetooth 4.0 that allows devices — smart running shoes, heart-rate
monitors and the like — to operate for up to a year on very small
batteries. This is a big mobile growth area in itself, as gadgets such
as the new iPad and Samsung's Galaxy S III can act as hubs for these
devices.
Samsung and CSR hope the deal will close in the fourth quarter, although
this depends on regulatory approval from South Korean and other
authorities.
"I believe that under Samsung's ownership the handset operations will be
in a better position to prosper in the global handset market," van
Beurden said. "I would like to thank all our colleagues who will be
transferring to Samsung for their outstanding service to CSR over many
years."
