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Intel Acquires SiPort

Big semiconductor maker invests further in digital radio chips for portables

Intel now owns a company that plays an important, if low-profile, role in the world of HD Radio consumer electronics.

SiPort, the Santa Clara-based company whose chip is used in the Insignia HD and Microsoft Zune HD, has quietly been acquired by Intel Corp., one of its investors. Intel is the world’s largest semiconductor chip maker based on revenue, it says.

I say “quietly” because there’s no press announcement on the acquisition of the privately-held SiPort, which, in addition to HD Radio, also designs and manufactures ICs for Digital Multimedia Broadcast (T-DMB) and Eureka DAB digital radio technologies. Specifics of the deal have not been disclosed.

SiPort specializes in low-cost, low-power consuming receiver chips. SiPort’s employees, which numbered around 40 in 2008, are now part of Intel’s Mobile Wireless Group. As of December 2010, Intel had 82,500 employees worldwide, with approximately 55% of those in the U.S.

In a message on SiPort’s website to its customers, it and Intel state “Digital radio is poised to become an important ingredient for handsets and other mobile devices as broadcast radio transitions from analog to digital. SiPort’s digital radio expertise and solutions will leverage Intel’s market and technology leadership to provide best-in-class digital radio solutions.”

SiPort was a venture-backed privately-held company formed in 2004. Intel Capital, parent Intel’s strategic capital arm with an eye on computing, networking and wireless communications, was an investor, along with venture capital firms Lightspeed Venture Partners, Morganthaler and New Venture Partners.

In August 2008, iBiquity certified SiPort’s IC — a single chipset solution for HD Radio tuners. SiPort was working on its HD Radio chip to be integrated into the Microsoft Zune that fall when three executives were shot and killed, including SiPort CEO Sid Agrawal, who had co-founded the company. A former SiPort employee was charged. After the shooting, co-founder Aiman Kabakibo became interim chief executive.

Despite the chaos, SiPort continued working on the project. The Microsoft Zune HD went into production in June 2009 with the SiPort HD Radio chip.

In January 2010, SiPort named a new chief executive, David Rolston.

Intel is a publicly-traded company on NASDAQ with $43.6 billion in net revenues for 2010, “its best financial results ever,” according to its annual report. Interestingly, former FCC Chairman Reed Hundt is on Intel’s board of directors. The company made another wireless acquisition this year; the WLS business of Infineon (with over 3,000 employees) which will operate as Intel Mobile Communications and offer mobile phone components such as baseband processors, radio frequency transceivers and power management chips.

In its annual report, Intel said the objective of that acquisition is “to contribute to our strategy to provide solutions with Internet connectivity to a range of computing devices.”

As to what the Intel pickup of SiPort means for HD Radio, a source notes that Intel is a “huge” player in the mobile space and the acquisition “is further validation of market opportunity. They’re talking to everybody who makes a wireless device on an ongoing basis.”

And what about the goal of getting HD Radio into cellphones? It can only help, according to this line of thought.

Intel “did not buy this company to slow the process down,” the observer said. “They bought it because they feel like there’s progress. Intel isn’t going to spend a dime unless they think there’s market potential. They do big.”

— Leslie Stimson