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Cypress Seals $550 Million Deal with Broadcom’s “Internet of Things” Business

The “Internet of Things” – the development of objects that have network connectivity allowing them to send and receive data – hasn’t been given the opportunity to grow in the tech industry. To solve this problem, Broadcom sold its IoT unit to Cypress Semiconductor.

The $550 million deal was proposed in April was closed on Tuesday giving Cypress Broadcom’s WiFi, Bluetooth, and Zigbee wireless technology. Senior vice president of the IoT Unit, Stephen DiFranco, says that this transaction will allow the IoT unit a chance to grow.

Although Broadcom has had incredible Bluetooth and WiFi products, the business unit in charge of these products was used to working with larger companies. Difranco states that “Broadcom’sales team is focused on the largest customers in the world. We had very few resources to be able to expand the business.”

With the direction that IoT market is heading, it will be defined through startups and experimentation. Companies are experimenting with connected doorbells, thermostats, and lightbulbs, but no large company has dominated the industry. After Broadcom merged with Avago earlier in the year for $37 billion, Broadcom executives decided it’d be best to benefit from an outside buyer. “The Broadcom business model wouldn’t let us access the mass market opportunity we felt we needed for IoT,” said DiFranco. “IoT is many customers, many products, and those products need to iterate quickly. Broadcom wasn’t designed for that.”

Broadcom plans to keep the Bluetooth and WiFi business for electronic devices such as phones and laptops. Apple, for instance, is currently a huge consumer Bluetooth WiFi chips for their phones and watches.

With Cypress’ acquisition came Broadcom’s WICED software development kit. This free software is designed for hardware makers to quickly incorporate Bluetooth and WiFi into their devices and gets 15,000 downloads a month.

With this Cypress gains some wireless technology expertise that will enhance their microcontrollers. Over time Cypress will learn to combine these two technologies. This accomplishes Broadcom’s goal, to bring WiFi and Bluetooth to as many devices as they can. 

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