Silicon Image to Acquire WirelessHD Chip Developer Sibeam

Silicon Image will “aggressively drive” down the cost of implementing WirelessHD, building on its proposed $25.5 million purchase of Sibeam, CEO Camillo Martino said Thursday on a conference call held to describe details of the acquisition. Silicon Image will pay $14 million cash and $11.5 million in stock in a deal that is expected to close in Q2, the company said.

While Sibeam transmitter/receiver chips carry a double-digit average selling price, the goal is to drop the cost into the single digits within two to three years as WirelessHD expands into cellphones and tablet PCs, Martino said. Sibeam produced $2.5 million in revenue in 2010, but WirelessHD could be a $100 million business for Silicon Image “at some point,” Chief Financial Officer Nolan Granberry said. Sibeam forecast increased sales this year as it introduced a third-generation WirelessHD chip that could help drive adapter prices into the $49 to $79 range by year-end (CED Oct 7 p2).

The WirelessHD chips will continue to be sold as modules separate from Silicon Image’s HDMI and Mobile High Definition Link (MHL) technologies for several years. Both MHL and HDMI chips are cheaper than WirelessHD ICs, and MHL adds the advantage of being able to charge a device while its being used. WirelessHD has largely been confined to TVs and notebook PCs. LG Electronics, Panasonic and Sony are among the CE companies that made the technology available as an adapter or built-in technology for LCD TVs or separate set-top boxes, but sales have been small. Panasonic, along with Samsung, invested in Sibeam in late 2008, but it dropped a WirelessHD-equipped 50-inch plasma TV. Samsung hasn’t introduced a WirelessHD-based product. Asus also fielded two WirelessHD-equipped notebook PCs. WirelessHD uses the 60 GHz spectrum to deliver data and HD video.

In addition to Panasonic and Samsung, Sibeam counted Cisco and Best Buy among its investors, the latter using the technology in Rocketfish adapters. It wasn’t clear whether the companies’ investments would carry over into Silicon Image. A Best Buy spokesman declined to comment, while Cisco, Panasonic and Samsung officials weren’t available at our deadline.

In combining Silicon Image and Sibeam, “there is a great opportunity to leverage the companies’ distribution channels,” Martino said. The acquisition will give Silicon Image a chance to “re-engage” in negotiations with PC companies, Martino said. Silicon Image also will work to drive adoption of the WirelessHD standard in a manner similar to that it used pushing HDMI and MHL, Martino said.