Broadcom Corporation has acquired Sunext Design, Inc., a wholly-owned U.S. subsidiary of Sunext Technology Company Limited, and has licensed certain optical disk reader and writer technology from Sunext Technology. Sunext Technology is a privately-held fabless semiconductor company that specializes in optical storage technologies.

High definition optical disc players are emerging as a popular platform for in-home entertainment worldwide by combining the benefits of a high definition viewing experience with the convenience and familiarity of DVD media. Sunext single-chip front-end technology is a strong complement to the industry-leading Broadcom system-on-a-chip (SoC) back-end Blu-ray Disc platform, and key to an integration roadmap that will drive the cost of these devices down to levels that enable widespread consumer adoption of high definition optical disc players and recorders.

With the increasing adoption of full high definition 1080p digital televisions, and with the consumer electronics and media industries now united behind the Blu-ray Disc high definition DVD standard, demand for these high definition players and recorders is expected to increase significantly. As the market grows, manufacturers will strive to reduce prices by adopting optimized SoC solutions that integrate front-end and back-end functions. Broadcom, a leader in integrating advanced functionality, is responding to this trend by acquiring rights to the most highly integrated optical disc front-end technology available. The addition of Sunext's leading technology, along with the experienced engineering team from Sunext Design that can continue to enhance those technologies, will enable Broadcom to derive significant time to market advantages in the development of these highly integrated solutions.

"To further the widespread adoption of high definition Blu-ray Disc media players, it is imperative to have cost-effective, complete silicon solutions, and the acquisition by Broadcom of Sunext Design and license of its associated technology puts Broadcom firmly ahead in the race to offer a complete Blu-ray solution," said Michelle Abraham, Principal Analyst at In-Stat. "The merging of these technologies will help drive down the costs of next-generation Blu-ray Disc players and enable OEMs to deliver products that meet the price points required for mass adoption by consumers."

"The technology that will win the market share battle for Blu-ray Disc players and recorders will be the one that provides the highest quality audio and video processing while integrating the most advanced front-end and back- end functions into a single low cost device," said Dan Marotta, Senior Vice President and General Manager of Broadcom's Broadband Communications Group. "Sunext's technology and strong engineering team will enable Broadcom to integrate optical reader/writer capability into our industry leading Blu-ray Disc silicon solutions."

"Broadcom's strong position in the Blu-ray Disc player and other home digital multimedia market segments makes it an ideal partner for Sunext Technology, making our optical technologies available to an existing customer base that is demanding integrated, high performance yet low cost solutions," said Dr. Phil Mak, President of Sunext Technology. "Armed with our robust solution, Broadcom will help drive the next evolution of these devices to the digital home while Sunext continues to deliver products to our customers and core markets."

In connection with the transaction, which closed on Friday, February 29th, 2008, Broadcom will pay up to $48 million in cash in exchange for all of the outstanding shares of Sunext Design's capital stock and for the license rights granted by Sunext Technology. A portion of the consideration payable to the stockholders of Sunext Design will be placed into escrow pursuant to the terms of the acquisition agreement, and a substantial portion of the consideration payable to Sunext Technology for the license rights is subject to the achievement of certain deliverables post-closing. The boards of directors of both companies have approved the transaction. Broadcom may record a one-time charge for purchased in-process research and development expenses related to the acquisition in its first quarter. The amount of that charge, if any, has not yet been determined.

 

Sunext Technology Company Limited

Broadcom's Broadband Communications Group