Broadcom has said it will pay $192.8m to acquire AMD's digital TV (DTV) business, stating plans to make the unit the center of its existing DTV line.

The move was not unexpected. An American Technology Research report in July noted that such a buy was possible, would be good for both parties, and at the time estimated the AMD unit had revenue contribution above $250 million a year. 

Further adding to industry speculation, AMD has stated plans to exit its “non-core” businesses by the end of Q3 as part of its continuing hunt for profitability and recorded notable weakness in its consumer electronics group in Q1 when the business’ sales of $81m fell 26% sequentially. In its Q2 earnings report, AMD listed both its DTV and handheld divisions as discontinued operations, due to its intention to divest.

"AMD is executing a strategic plan to transform the company, becoming leaner and more focused while seeking to create a business model to deliver sustainable profitability," said Dirk Meyer, AMD’s president and CEO.

"The sale of our DTV business is a key step in AMD's transformation, helping to strengthen our balance sheet, lower our breakeven point, and hone our focus in order to take full advantage of our position as a leader in both microprocessors and graphics technology. Broadcom will be a great fit for our talented DTV employees and the DTV products they have created," said Meyer.

Several of the DTV unit’s products came to AMD through its $5.4bn, 2006 ATI acquisition, a deal which has come under scrutiny since its close with many analysts suggesting that AMD overpaid for the GPU maker. AMD's DTV product line includes all Xilleon integrated DTV processors and turnkey reference designs, as well as NXT receiver ICs, the Theater 300 DTV processor, and a line of panel processors that perform motion compensation, frame rate conversion and scaling.

As part of the deal, approximately 530 members of AMD's DTV team, in addition to certain employees directly supporting this team, will be invited to join Broadcom.

"The acquisition of AMD's DTV business, which will become the core of Broadcom's DTV line of business, will enable us to significantly scale and accelerate the completion of our digital TV product portfolio while also expanding our tier one customer base and positions us to achieve leadership and long-term growth in this important market segment," said Daniel Marotta, senior VP and general manager of Broadcom's broadband communications group, in the statement. "We believe our combined DTV team will be in an excellent position to grow and thrive in this burgeoning market by bringing best-in-class people, technology, solutions and support to our customers."

The acquisition is expected to close by year end.

Suzanne Deffree is managing editor for news at Electronic News