Aug. 26--Broadcom Corp., an Irvine chip maker, expanded its digital television group Monday with its $192.8 million purchase of AMD's digital TV division.

The acquisition -- which comes with 530 AMD employees working at six design centers -- aims to expand Broadcom's reach into the digital TV sphere and target not just people who want the fanciest TVs but also those who want more affordable ones.

Broadcom is targeting the low-end market to give its TV customers a full menu of options, said Daniel Marotta, senior vice president and general manager of the company's Broadband Communication's Group, which includes the TV unit.

"What (customers) would like to do is be able to reuse our software at different (priced products)," Marotta said. "If you don't have the right product, they'll go elsewhere." The two companies overlap in high-end TV features. Both offer chips that provide 3D graphics and connectivity to the Internet or a home network so a TV can view YouTube videos from a home PC. That should help Broadcom take high-end features and move them to lower-priced models.

"Given the very technical team we have, we want to drive that down (to lower-end TVs) as fast as we can," Marotta said.

Broadcom -- which also makes communication chips for cell phones, GPS devices and Wi-Fi and Bluetooth products -- also wants more cross breeding between the technologies.

For example, Marotta said, "We're looking to add Bluetooth so when your cell phone would ring, the caller ID pops up on TV. Or use Bluetooth headsets to listen to TV. Or beam a picture taken on the phone and show it on the TV. We obviously want to take advantage of what we have." Cody Acree, an analyst with Stifel Nicolaus, told Reuters that this could mean cheaper televisions -- like 20-inch flat-screen TVs for less than $300.

"If Broadcom gets into a lower-end DTV box, it allows them to target markets like China, India and Brazil," Acree said.

Cheaper TVs would be welcome news for all viewers who have been holding on to their old analog TVs. Unfortunately, Broadcom's purchase won't help consumers scrambling to prepare for digital TV and the February DTV deadline. After that date, consumers who watch shows on an older, analog TV with an antenna will be staring at a dark screen. They'll need a digital converter box if they want to continue using their TV.

Just a few years ago, flat-panel TVs were luxury items that few people could afford. This year, the average price for digital TVs is $917. That is expected to fall to $875 in 2009. And prices will continue to plunge, according to Tim Herbert of the Consumer Electronics Association. He predicts that future DTV models will sell for less than $200.

AMD chips can be used in converter boxes, says Jo Albers, an AMD spokeswoman. (Broadcom chips already are in some digital converter boxes).

The AMD chips that Broadcom is buying include:

--AMD Xilleon: Helps with TV signal reception, graphics, picture processing, video decoding, and multimedia. Products include all sorts of digital TVs, from CRTs to LCDs, plasmas and projection TVs.

--NXT and AMD Theater 300 series: Used for TV reception and demodulation in TVs and satellite set-top boxes.

The sale, pending regulatory approval, is expected to be completed by the end of the year. As part of the deal, Broadcom will buy AMD's patents and patent applications related to DTV.

Broadcom said it may take a one-time charge for the purchase, but the amount has not been determined.

Broadcom's stock price closed at $26.17 on Monday, down 4.6 percent from the previous session.

AMD, the world's second-largest maker of personal-computer processors, gained the digital-TV chip business with its $5.4 billion acquisition of ATI Technologies in 2006. The purchase added graphics chips to AMD's product line. AMD said it sold off the TV business to concentrate on its core product of computer chips.

Register staff writer John Gittelsohn, Register intern Michael Gil, Bloomberg News and Reuters contributed to this report.

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