The “Internet of Things” – the dry jargon used to describe the growing number of connected products invading our lives – is still a messy experiment for the tech industry. And for a large chip maker like Broadcom, probably still too small. That’s why Broadcom sold its IoT unit to Cypress Semiconductor, said Stephen DiFranco, who came over from Broadcom in the sale and is a senior vice president for the IoT business unit at Cypress.

The $550 million deal, announced in April, closed on Tuesday. Cypress acquired Broadcom’s WiFi, Bluetooth and Zigbee wireless technology for the emerging IoT market. The sale will give the unit a chance to grow, said DiFranco.

“We had incredible Bluetooth and WiFi products and were winning customers, but we were a business unit that was part of a company that was used to working with large companies,” said DiFranco. “Broadcom’s sales team is focused on the largest customers in the world. We had very few resources to be able to expand the business.”

For now, the IoT market is bit hard to define. Rather than having large companies dominate the industry, the market is going to be shaped by many startups and established companies experimenting across many different kinds of products. Companies are experimenting with all kinds of new connected doorbells, thermostats and light bulbs, but no one company has emerged as a leader. Soon after Broadcom merged with Avago earlier this year in a $37 billion deal, DiFranco and Broadcom executives decided it was best to find 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 will keep the Bluetooth and WiFi business for phones and set-top boxes. Apple, for example, is currently a big user of Broadcom’s Bluetooth-WiFi combo chips in its phones and watch.

The Broadcom IoT unit brought 400 engineers and marketing employees over to Cypress. The division had $189 in annual revenue and was growing 17% year-over-year at the time of the sale, said DiFranco.

Also in the Cypress acquisition came Broadcom’s WICED software development kit, which is designed for hardware makers to quickly get WiFi and Bluetooth up and running in their devices. WICED is free and currently gets around 15,000 downloads a month from developers.

For Cypress, this will finally give the San Jose, Calif.-based chip maker some wireless technology prowess. Cypress’ business revolves around microcontrollers, memory and programmable system on a chip. Over time, Cypress will integrate its existing products with the wireless technology.

“Our mission is to bring WiFi and Bluetooth to as many devices as we can and drive more connected products,” said DiFranco.

By: DocMemory
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