Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Cypress Assumes IoT Leadership With Broadcom Asset Buyout

Published 07/07/2016, 10:04 PM
Updated 07/09/2023, 06:31 AM

Cypress Semiconductor Corp. (NASDAQ:CY) announced that it has acquired some of the assets of Broadcom Limited (NASDAQ:AVGO) in an all-cash transaction of $550 million. The deal was announced in April this year.

As per the terms of the deal, Cypress will assume the Wireless Internet of Things (IoT) business and related assets of Broadcom.

Broadcom will retain the Bluetooth and WiFi businesses meant for phones and set-top boxes. Note that Apple Inc. (NASDAQ:AAPL) is a major client of Broadcom and uses its Bluetooth-WiFi combo chips in iPhones as well as watches.

About IoT

The “Internet of Things” is a concept seeking to connect devices used for everyday living to the Internet, so they can share and exchange data and thereby operate more intelligently. It may also enable devices to communicate with each other where required (such as in connected homes).

Since it is still in a nascent stage, it is currently dominated by innovative startups. Larger companies like Intel (NASDAQ:INTC) and Alphabet’s (GOOGL) Google (NASDAQ:GOOGL) are attempting to provide building blocks. But since the value of the technology might in some cases be a significant percentage of the device cost itself, some of these big companies will become device providers in the IoT world.

Although many companies have come up with their versions of interconnected devices comprising doorbells, thermostats and light bulbs, none has emerged to assume the role of an industry leader at this point.

Advantage Cypress

IoT Leadership: The $550 million acquisition makes Cypress the only company in the space to have cutting-edge wireless radios, MCUs, memories and power management ICs for integrated IoT systems in its repertoire.

This would make it a key player in the automotive and industrial IoT segments.

Wireless Prowess: The acquisition will help Cypress to gain wireless technology prowess and integrate some of its existing devices such as microcontrollers, memory and programmable systems on chips with wireless technology.

WICED: The WICED software development kit has been designed keeping hardware manufacturers in mind. This enables them to quickly install WiFi and Bluetooth in their devices.

Connected Cars: The acquisition would now support simultaneous use of multiple displays as well as media sharing. Additionally, Broadcom’s radios are compatible with Cypress’s Traveo automotive MCUs that facilitate the firmware to send real-time over-the-air updates, eventually reducing implementation costs. It is an ingenious way to keep the car in great shape.

Consumer IoT: This is a high growth segment that includes products such as wearable electronics and home automation solutions. Cypress will now become a key player in this segment as well.

The main objective of the company would now be to implement WiFi and Bluetooth technologies in as many devices as possible in a bid to connect them with one another.

Our Take

We note that given the ever increasing number of connected products making their way into our everyday lives, IoT is poised to grow strongly. This acquisition brings Cypress some key capabilities to cater to this huge opportunity.

At present Cypress has a Zacks Rank #3 (Hold).

Stock to Consider

A better-ranked stock in the broader technology space is DSP Group Inc. (NASDAQ:DSPG) , sporting a Zacks Rank #1 (Strong Buy).



CYPRESS SEMICON (CY): Free Stock Analysis Report

DSP GROUP INC (DSPG): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

BROADCOM LTD (AVGO): Free Stock Analysis Report

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.