Broadcom acquisition could lead to cheaper Blu-Ray players

Without the format war going on in the background, Blu-ray consoles may no longer be able to justify artificial price premiums. So tech provider Broadcom may be stepping in to drive the adoption of cheaper components.

Broadcom announced Monday that it has acquired Sunext Design Incorporated, the US arm of Taiwanese company Sunext Technology which specializes in chips and architecture for optical drives.

This acquisition is crucial to Broadcom, who has been showing off high-definition Systems on a Chip (SoC) since last year. Its design integrates dual MIPS execution units, dedicated graphics engines, 7.1 audio, security processor, hardware still image decoder, audio and video outputs, and more. The important thing these systems lacked was something to handle the front end -- the operation of the consoles themselves.

Sunext's single chip front-end technology is precisely what the company needed to complement this strong back-end offering. Broadcom will no doubt begin to market total Blu-Ray chipset solutions at a price which should ultimately drive down the total cost of players. Before Christmas, Understanding & Solutions' Senior Technology Consultant Bill Foster predicted that the bill of materials for Blu-ray players would be under $150 beginning in the first half of this year.

Currently, Broadcom chips are employed in the majority of Samsung's Blu-Ray players, as well as in LG and Philips players. Philips also has had dealings with Sunext for optical drive semiconductors. It will be one of the first companies likely to see the benefit of this acquisition.

The transaction closed on Friday, February 29, costing Broadcom upwards of $48 million for a capital stock buyout and entitlement to Sunext Design's licenses.