Conexant to turn over STB business to NXP

The deal will put NXP in a position "to compete head-to-head with Broadcom and STMicroelectronics," Christos Lagomichos, executive VP and general manager of NXP's home business Unit, told EE Times. By consolidating Conexant's set-top expertise with NXP's digital TV business, "we hope to bring scale and muscle to the digital video business," Lagomichos added.

NXP's main digital video business has so far been focused on terrestrial IP and retail STB and DTV products. Through the acquisition, it will gain a significant presence in the broadcast operator STB business. By combining Conexant's STB business with its own, Lagomichos estimated NXP will be able to double its current home business unit operation, which currently approaches $200 million.

Significant gains
NXP will acquire a long list of Conexant STB customers, its intellectual property related to digital video and approximately 700 Conexant employees. Current Conexant satellite and cable set-top customers include Echostar, DirecTV, Comcast, Motorola, Sky and others.

The acquisition also will bring NXP a "significant list of IPs" from Conexant, according to Laomichos. ranging from various channel coding technologies—including DVB-S2, Turbo coding and ATSC demodulations—to cable technologies such as DOCSIS 2.0 and 3.0, coaxial-based home networking technologies such as Multimedia-Over-Coax Alliance and digital content protection technologies such as secure video processor.

NXP is a key player in silicon tuners and video coprocessor products designed to enhance picture quality.

Conexant's broadband media processing business, which includes satellite, cable and IPTV applications, accounted for $205 million in revenue in 2007. Under terms of the deal, NXP will pay Conexant $110 million in cash up front, and up to $35 million based on achievement of certain revenue milestones during the period between the deal closing through 2009. Lagomichos noted that 60 percent of Conexant's business is in emerging markets like China and India. "I see that as a major advantage," he said.

Lagomichos cut his teeth building up ST's set-top business prior to joining NXP in 2007. He acknowledged that the success of the acquisition depends on how well and how fast the two companies' digital video operations can be integrated.

As for technology, Lagomichos said a transition to 45nm process node, "where NXP is making a tremendous progress," is a top priority. Conexant's products are currently based on 90nm process technology while making the transition to 65 nm. "We may want them to skip 65 nanometers and go directly to 45 nanometers," said Lagomichos.

Regarding integration, Lagomichos stressed that Conexant will be in charge of the new STB business. "We want to give Conexant freedom to develop the new business and to retain top talent."

Stressing the quick integration of the two business operations as the key to success, Logomichos said NXP hopes "to see a homogenous structure by the end of this year."

- Junko Yoshida
EE Times