Mobile chip vendor Qualcomm has confirmed its plan to acquire leading W-Fi chipmaker Atheros Communications. The all-cash, US$45 a share deal values Atheros at US$3.1 billion. It is priced at a 22 percent premium to Atheros’s closing price before news of the deal broke. The acquisition is Qualcomm’s largest-ever and one which the company expects to close in the first half of 2011. News first broke yesterday (5 January). 

The acquisition should boost Qualcomm’s strategy to move beyond its traditional customer base in the mobile industry. ”It is Qualcomm’s strategy to continually integrate additional technologies into mobile devices to make them the primary way that people communicate, compute and access content. This acquisition is a natural extension of that strategy into other types of devices,” said Paul Jacobs, chairman and CEO of Qualcomm. Atheros is a producer of chips used in Bluetooth, Ethernet networking and GPS, as well as Wi-Fi technology where it is the number two chip vendor. Acquiring Atheros gives Qualcomm access to its customers which include consumer electronics makers of devices such as video game consoles, tablets, e-book readers, televisions and printers, as well as PCs and wireless routers. Buying Atheros is a quicker solution for Qualcomm than building up its own W-Fi chip business. Interestingly, Atheros’s largest customers are Hon Hai Precision Industry which makes iPhones and Macs for Apple and games giant Nintendo. Other customers include Dell, HP and Microsoft. In the longer term, Qualcomm’s aim will be to integrate its and Atheros’s capabilities onto a single chip. Atheros’s desirability was confirmed by analysts interviewed by Reuters who have not ruled out a counterbid from the likes of Intel or Marvell. “Analysts said the size of the [Qualcomm] premium leaves room for another bidder to emerge,” an article said.