Terayon spins off chip business

As expected, Terayon Communications Systems spun off its chips business into a wholly owned subsidiary, Imedia Semiconductor, which will design, manufacture and sell advanced silicon and software to cable-equipment suppliers for present and future-generation DOCSIS cable modems and cable-modem termination systems [CMTS].

CableLabs’ recent decision to include synchronous code division multiple access [S-CDMA] and advanced time division multiple access [A-TDMA] as mandatory technologies in DOCSIS 2.0--coupled with Terayon’s lead as the only company to implement this combination--gives Imedia a jumpstart on next-generation DOCSIS chips, said Terayon CEO Zaki Rakib.

“The creation of this company is a validation for the success of a strategy,” Rakib said, noting Terayon’s longtime support for S-CDMA and its inclusion in Terayon’s proprietary systems. “Given that S-CDMA will become part of a standard, it’s time to spin out and unlock this value to the shareholders, to the industry.”

Rakib said Terayon also will begin to exit the cable-modem business.

“We will definitely support the proprietary business, which includes both modems and headends, throughout 2002 and will be selling some DOCSIS 2.0 modems probably over the next quarter or two, so we can generate enough interest among the operators to buy headends from Terayon,” he said. “Ultimately, the game for us is to sell DOCSIS 2.0-based headends.”

As part of that game, Terayon will buy chips from Imedia, along with the rest of the industry. Rakib said he saw no conflict in this policy.

“We want to operate it as an arms-length organization,” he said. “My guess is that companies will view having DOCSIS 2.0 as being advantageous. That will be a catalyst for companies” to buy chips from Imedia.