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AMD sells digital TV chip unit to Broadcom
|26 августа 2008|
Advanced Micro Devices on Monday announced the sale of its digital TV chip business to rival Broadcom as it sought a return to profitability.
Broadcom will pay $193m for AMD’s lossmaking business in a move to strengthen its position in the digital television market.
AMD has struggled to compete with its bigger rival Intel in the PC microprocessor market over the past two years and has reported losses for seven successive quarters.
Last month, it replaced Hector Ruiz, chief executive, with Dirk Meyer, who had been president and chief operating officer. It said it would focus on its core business – the PC microprocessor market – where Intel and itself have more than 95 per cent of the market.
The Silicon Valley company announced it would sell off the digital TV and handheld chip businesses, acquired when it bought Canadian graphics chipmaker ATI in 2006.
Analysts welcomed the move as helping AMD’s financial position and boosting Broadcom’s prospects in the DTV market.
Avi Cohen, head of research at Avian Securities, said Broadcom was the most logical buyer of the business as it had become one of the leading players in DTV.
“For AMD, this will allow [it] to raise cash to improve its balance sheet position and realign its core business. At the same time, it will give it a way to exit a business that has become very competitive.”
The US authorities have been demanding basic solutions for the switchover from analogue to digital television taking place on February 17 and the chip business has seen commoditisation and major price erosion.
Broadcom said the acquisition meant it could “immediately scale its DTV business and . . . offer a complete product line that covers all segments”.
Around 530 AMD employees in six design centres around the world will join Broadcom as part of the deal, which is expected to be completed in the fourth quarter.
Broadcom shares fell nearly 4 per cent to $26.36 in midday trading in New York, while those of AMD rose 3 per cent to $5.99.