Santa Clara (CA) – A major merger in the wireless networking technology field culminated on Monday, with WiFi chipset provider Atheros Communications agreeing to acquire ZyDAS, a fabrication facility 65% owned by competitor Zyxel Communications, for what sources tell the leading Taiwan technology publication DigiTimes to be a paltry US$10.3 million. That’s with an “m,” and yes, the decimal point is before the “3.” (Atheros estimates the deal as worth $23 million.)
The deal, which had been rumored for weeks but flatly denied by all sides in the Taiwan press, could be a very sweet one indeed for Atheros, according to Tom’s Networking’s Tim Higgins. Up to this point, ZyDAS produced components that were used in Zyxel products, including USB-based WiFi devices. However, Atheros was already a chipset supplier to Zyxel, as well as to other competitors as well as Atheros’ own product facilities, making WiFi components for PCI and CardBus. Now, for a price that truly looks like a typo, Atheros not only ends up with a full suite of WiFi production facilities, but will probably expand its presence as a provider for Zyxel and others. And Zyxel’s chairman, Shun-I Chu, already told DigiTimes he expects ZyDAS to reap the benefits of Atheros’ investment, by expanding its production of 0.13-micron (130 nm) WLAN components.
According to Atheros’ statement, it will absorb all of ZyDAS’ 70 employees, three-fourths of whom are in the R&D department. Atheros’ president and CEO, Craig Barratt, explicitly stated that he intends to “leverage ZyDAS’ engineering capabilities to bring to market higher performance 802.11n WLAN USB adapters.” It cited IDC figures stating the market just for WLAN USB adapters alone amounted to 9.4 million units in 2005, with a projected annual growth rate of 148% over the next three years. So let’s see…that’s about 30.5 million units sold in 2007, divide that by 10.3…At three bucks per pop, that’s a very smart investment.