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Terayon Sells Silicon Unit to ATI

ATI Technologies Inc. has signed a definitive agreement to buy Terayon Communication Systems Inc.’s cable-modem-silicon intellectual property and hire about 25 employees from Terayon's design team.

ATI agreed to pay up to $14 million in cash, $6.95 million of which will be paid on closing, with the balance subject to the satisfaction of certain conditions including completion of certain deliverables.

"ATI is the leading supplier of silicon in HDTVs," an ATI executive said in a news release. "This acquisition of Terayon’s field-proven IP [Internet protocol] cements our lead as the industry moves to interactive digital-cable-ready technology and keeps us at the cutting edge of DTV [digital-TV] development."

ATI shipped more than 5 million digital-TV chips in 2004 to such consumer-electronics firms as Sony Corp., Samsung Electronics America Inc. and Mitsubishi Digital Electronics America Inc., in addition to set-top makers Scientific-Atlanta Inc. and Pace Microsystems plc.

Terayon CEO Jerry Chase said in the release: "This agreement with ATI is a key step in our strategic initiative to focus our efforts on our core video and home-access-solutions businesses.”

He added, “Several years ago, being vertically integrated was a competitive advantage for us in the cable-modem business, but today, it is more advantageous for us to focus on adding new value-added functionality to our home-access solutions, rather than designing and building our own cable-modem chips. This deal with ATI will enable us to do just this and to free additional resources for expanding our highly successful digital-video-solutions product lines."

More than 3 million Terayon “TJ 700x-series” cable modems have been deployed by cable operators worldwide. Terayon is based in Santa Clara, Calif.