Chipmaker Conexant splits operations in two

Conexant Systems Inc. said Wednesday it plans to separate its operations into two as-yet-unnamed independent communications semiconductor companies. One business will focus on chip making and develop software application for Internet infrastructure equipment manufacturers, while the other will target personal networking applications for mobile communications and home broadband usage.

Conexant – a chip maker working in the communications electronics segment – announced that its board of directors approved the split, hoping to strengthen the vendor’s competitive position and refine its customer focus, Conexant said in a statement.

The new company, which will concentrate on the Internet infrastructure equipment arena, comes out of Conexant’s current network access division. The other new company will comprise the vendor’s wireless communications, digital infotainment, personal imaging and personal computing divisions, Conexant said in the statement.

The vendor said it would release details about which of the two new companies will retain the Conexant name.

The Newport Beach, Calif.-based vendor plans to use a two-step process for spinning off the Internet infrastructure business with the first move in the form of an IPO (initial public offering) of the new company’s stock scheduled for January 2001. Six months later, the vendor intends to distribute the remaining shares to Conexant shareholders. This second step hinges on U.S. Internal Revenue Service (IRS) approval, the company said.

The Internet-related business will be fabless and is expected to surpass US$550 million in sales during Conexant’s current fiscal year, according to the statement. If the new company meets sales expectations, it would account for 30 percent of Conexant’s total revenue. Customers for these services include Cisco Systems Inc, Lucent Technologies Inc., Nortel Networks Corp. and Alcatel SA.

The personal networking company will use Conexant’s process technology and manufacturing assets and will look to broadband cable and DSL (digital subscriber line) modems, home networking and digital cable and satellite set-top box markets. Clients for this company would include Dell Computer Corp., Compaq Computer Corp., Hewlett-Packard Co. and a number of game console manufacturers as well as other entertainment-related vendors, Conexant said.

The two new companies will form a multi-year technology and marketing alliance, Conexant said. Information on the management and board of directors for the two vendors should appear in the months to come, according to the company release.

Conexant, based in Newport Beach, Calif., can be reached at