Qualcomm buys Atheros to target smartphone and tablet markets

Qualcomm is to buy chip maker Atheros Communications for $3.1bn (£1.9bn) in a move designed to increase the breadth of Qualcomm's hardware platform.

The acquisition will help Qualcomm expand its technologies into new business areas, and provide access to new growth opportunities, the firm said, suggesting that it is eyeing the growing smartphone and tablet markets.

Qualcomm will pay $45 (£29) per share for Atheros. The deal has already been approved by both companies' boards of directors, and comes as both firms exhibit new products at the Consumer Electronics Show in Las Vegas.

The acquisition is expected to close in the first half of 2011, and Atheros chief executive Craig Barratt will become Qualcomm's president of networking and connectivity.

Industry observers were cautious on the deal, however. Clive Longbottom, an analyst at Quocirca, suggested that Qualcomm will benefit from owning a more complete hardware platform, but raised questions about how this would work.

"Is Qualcomm going to pull 3G/Edge/Wi-Fi/Bluetooth together as a single platform requiring a single aerial, set of radios and drivers? In which case, battery life and performance in handing over signals across technology boundaries should be improved," he said.

"For example, with total control of the platform, handing over a call from 3G to Wi-Fi and back again would be far more practical. But this will require bringing together a whole set of technologies in a manner that hasn't been done before."

Longbottom also noted that Qualcomm may struggle to see a return on its investment in such a competitive market.

"It will be no [easy] task to create an integrated platform that will show marked improvements in usage and performance to make users insist on a Qualcomm stack, and this is the only way the $3.1bn can be recouped in an effective manner," he said.