Broadcom to acquire SiByte

Broadcom has signed a definitive agreement to acquire SiByte, Inc. SiByte, based in Santa Clara, is developing a new generation of processor chips for networking and communications applications.

SiByte’s network processors will complement Broadcom’s Internet Protocol (IP) switches, communications Digital Signal Processors, IP security solutions and physical layer transmission products.

With Internet traffic doubling every four to six months, and the migration of voice networks from circuit-based to packet-based architectures, networking devices such as routers, switches and remote access servers (RAS) are facing a tremendous processing overload.

SiByte’s products will provide the processing required to manipulate, manage, and move data at line rates ranging from 1.0 Gigabit-per-second (Gbps) up to 40 Gbps (OC-768). Their System-on-a-Chip (SOC) solutions will be targeted for use in Local Area Networks (LANs), Metropolitan Area Networks (MANs), Wide Area Networks (WANs), Voice over Internet Protocol (VoIP) gateways, optical networking and wireless communications.

At the heart of SiByte’s premier product, the Mercurian processor, is SiByte’s SB-1 core, a MIPS 64-bit superscalar CPU core capable of operating at frequencies up to 1.0 GigaHertz (GHz).

The SB-1 core supports a quad-issue pipeline, which can dispatch up to two memory and two ALU (integer or floating point) instructions per cycle. A 32K Data cache and a 32K Instruction cache are built into the core, each 4-way associative. Based on benchmark simulation results, the SB-1 delivers more than 2200 Dhrystone 2.1 Mips (millions of instructions per second) at 1.0 GHz. This translates to more than 800 Mips/Watt. The SB-1 also has features to support multi-processing. SiByte expects to provide samples of the chip to customers in the first half of 2001.

Broadcom intends to leverage the SB-1 core and future derivatives into various product areas within its broadband communications chip portfolio. Through its long-standing license agreement with MIPS Technologies, Broadcom has already enabled the integration of its own MIPS microprocessor designs into several SOC solutions for the cable modem, set-top, xDSL, satellite and high-speed networking markets.

In connection with the acquisition, Broadcom will issue in aggregate up to 9.3 million shares of its Class A common stock in exchange for all outstanding shares of SiByte’s preferred and common stock and upon exercise of outstanding employee stock options and other rights of SiByte.

About 5.6 million of the Broadcom shares will be issuable at closing of the acquisition; approximately 3.7 million additional shares will be reserved for future issuance to the stockholders and option holders of SiByte upon satisfaction of certain performance goals. The merger transaction is expected to close within 60 days and will be accounted for under the purchase method of accounting.

The Boards of Directors of both companies have approved the merger, which awaits approval by SiByte’s shareholders and the satisfaction of regulatory requirements and other customary closing conditions.

Broadcom expects to record a one-time charge for purchased in-process research and development expenses related to the acquisition in its fourth fiscal quarter, ending December 31. In addition to the purchase consideration, Broadcom will reserve approximately 1.8 million shares of its Class A common stock for future issuance to customers upon the exercise of outstanding performance-based warrants of SiByte that become exercisable upon satisfaction of certain customer purchase requirements.