Samsung Electronics Co has bought chipmaker CSR Plc's mobile phone connectivity and location technology for $310 million in a deal that strengthens the South Korean company's smartphone platform and patent portfolio.
CSR's chief executive Joep van Beurden said the British firm's Bluetooth, WiFi and location technology was cutting edge, but it was losing ground in smartphones to bigger rivals who were combining more functions in a single platform.
"There is a big war going on between the giants of the semiconductor industry like Qualcomm Inc, Intel and Samsung LSI to deliver the complete solution into smartphones," he said in an interview on Tuesday.
Shares in the Cambridge-based group closed up 33% at 295 pence after reaching a 12-month high of 302 pence in the session, as analysts welcomed CSR's exit from handset chips.
"Disposing of the handset business where CSR has been struggling to remain competitive looks to be a good move," said Singer Capital Markets.
However, the deal sent shares in chip rival Broadcom Corp down 3% to $29.85 in Tuesday trading on Nasdaq as some investors worried that a combined Samsung and CSR would eat into Broadcom's business.
Bernstein analyst Stacy Rasgon said the deal would be "most negative for Broadcom" because it is a very large supplier of chips to Samsung.
Samsung said the deal would add more capability to its platforms featuring the application processors that power the world's most popular smartphones and tablets - Apple Inc's iPhone, iPad and its own Galaxy products.
"By leveraging CSR's R&D capability, Samsung will strengthen its application processor platform and solidify its position as a leading semiconductor solutions provider," said Stephen Woo, Samsung's president of System LSI Business, Device Solutions.
Samsung and Apple are waging legal battles in about 10 countries, accusing each other of patent infringement as they vie for supremacy in the mobile device market.
The company tops the mobile apps processor market in terms of revenue, controlling 72% in the first quarter, followed by Texas Instruments Inc with 12% and Qualcomm with 9%, according to data from Strategy Analytics.
CCS Insight analyst Geoff Blaber said Samsung's move came hot on the heels of the acquisition of Nanoradio, a Swedish WiFi chip set company, on June 1.
"It underlines Samsung's commitment to strengthening its vertical advantage by extending silicon capability most notably in WiFi and GPS," he said.
As well as buying CSR's technology and handset team, which numbers 310 employees, Samsung will also invest $34.4 million in a 4.9% stake in CSR at a price of 223 pence a share.
Get all the latest news and videos in your inbox. Register FREE