Broadcom Acquires 3G WCDMA Player

17th June , 2004

US : Broadcom Corporation announced that it has signed a definitive agreement to acquire Zyray Wireless Inc., a leading provider of baseband co-processors addressing WCDMA (Wideband Code Division Multiple Access) mobile devices.

Inset shows Robert Rango, Group VP Broadcom Wireless Group quoted below.

Zyray's SPINNERchip™ co-processor enables third generation (3G) mobile communications technology to be easily added to current generation phone handsets and data terminals, complementing Broadcom's existing EDGE/GPRS/GSM mobile products with a cost effective WCDMA solution.

Zyray's SPINNERchip technology, which is currently being integrated into several handset designs, enables data device manufacturers to bring true 3G phones to market rapidly. Pairing the SPINNERchip technology with Broadcom's single-chip EDGE/GPRS/GSM and GPRS/GSM baseband processors enables two-chip WCDMA multi-mode phones in the near term and provides the potential for future solutions with enhanced integration.

WCDMA technology provides high-speed mobile connectivity with data rates of up to 384Kbps (kilobits per second), enabling new applications such as video telephony and messaging, graphics-rich sports and news clips, interactive gaming, location-based services and improved web browsing. As cellular phones emerge as the dominant platform for media convergence, these new applications will help cellular carriers maintain and increase average revenue per user (ARPU). According to a recent Deutsche Bank Securities, Inc. market report, the worldwide WCDMA market is expected to approach 200 million units by 2008, representing over one-fourth of total handset sales.

In addition to WCDMA technology, Zyray is currently developing HSDPA (High Speed Downlink Packet Access) functionality for integration into its next generation family of devices. HSDPA is the next step in the cellular evolutionary path after WCDMA and is expected to provide data rates of up to 10 Mbps in the downlink. Zyray is also developing MIMO (Multi-In, Multi-Out) transceiver technology that can significantly improve the performance of WCDMA and HSDPA. MIMO refers to radio links with multiple antennas at the transmitter and receiver to improve the performance of wireless connectivity. These techniques have broad applicability in several wireless and mobile technologies.

"We see significant activity in the WCDMA handset space, and having Zyray's products and technologies in-house gives us the flexibility of offering our customers the ability to manufacture both low-cost EDGE phones as well as higher functionality WCDMA handsets," said Robert Rango, Group Vice President of Broadcom's Mobile & Wireless Group. "Zyray also enhances Broadcom's technology portfolio with valuable intellectual property in the HSDPA and MIMO areas."

Broadcom offers a broad portfolio of mobile communications baseband processors, reference designs and cellular software protocol stacks, including the Broadcom® BCM2132 EDGE mobile multimedia processor, BCM2121 GPRS processor, and ML2011 GSM processor. The addition of Zyray's products and technologies will enable Broadcom to offer complete WCDMA and HSDPA baseband solutions and provide Broadcom with the opportunity to add MIMO transceiver technology to a broad spectrum of mobile and wireless technologies. Broadcom's proven expertise in mixed-signal and CMOS RF also enables the delivery of complete wireless, local and personal area network (WAN/LAN/PAN) solutions for mobile data communications with compelling size, cost and performance benefits.

"With its EDGE products certified on the AT&T Wireless and Cingular networks, Broadcom is an ideal partner for our SPINNERchip technology, enabling us to provide mobile phone OEMs with immediate access to a next- generation technology coupled with a broad range of products already in use," said Werner Sievers, President and CEO of Zyray. "We expect to see our combined products play a major role in driving the adoption of smaller, lower power 3G mobile phones, significantly increasing the availability of WCDMA handsets and enabling exciting new mobile applications."

The Zyray co-processor connects to existing EDGE/GPRS/GSM baseband processors via a standard memory interface, significantly simplifying multi- mode phone development while allowing manufacturers to capitalize upon their previous technology development investment. The Zyray architecture implements WCDMA functionality as a configurable set of hardware accelerators, rather than as software running on a general purpose digital signal processor (DSP), thereby enabling improved performance and lower power while retaining the ability to software-optimize the product. Future versions of the design are intended to handle up to 10Mbps in support of HSDPA.

"With EDGE proliferating in North America and WCDMA gaining traction in Europe and Asia, we expect these technologies to dominate the cellular landscape going forward," said Neil Strother, Sr. Analyst from In-Stat/MDR. "Handset manufacturers are looking to silicon vendors for support of the full spectrum of WCDMA/EDGE/GPRS/GSM cellular standards to accommodate carriers who are aggressively moving to deploy next generation technologies."

In connection with the acquisition, Broadcom will issue or reserve for issuance approximately 2.23 million shares of its Class A common stock (with a total value of approximately $96 million based upon the NASDAQ National Market closing price on June 15 of $42.84 per share) in exchange for all outstanding shares of Zyray capital stock and upon exercise of outstanding employee stock options and other rights of Zyray. In addition, Broadcom previously invested $3 million cash in convertible notes of Zyray that will be canceled without repayment in connection with the acquisition. A portion of the total consideration paid will be subject to escrow pursuant to the terms of the acquisition agreement. The merger transaction is expected to close during Broadcom's third fiscal quarter, which ends September 30. The boards of directors of both companies have approved the merger, which awaits approval by Zyray's shareholders and the satisfaction of regulatory requirements and other customary closing conditions. At closing, Broadcom expects to record a one- time charge for purchased in-process research and development expenses related to the acquisition. The amount of that charge has not yet been determined.

About Zyray Wireless

Zyray Wireless develops the SPINNER™ family of WCDMA semiconductor products for 3G mobile devices. SPINNERchip is an add-on WCDMA baseband processor that enables handset manufacturers to develop single-mode WCDMA, dual-mode GPRS/GSM & WCDMA and tri-mode EDGE/GPRS/GSM & WCDMA devices in a cost effective, low risk and time efficient manner. The SPINNER solution incorporates Space-Time Processing (STP) technology that provides improved data-rate throughout the cell coverage area and increased network capacity.

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