May 10, 2011 2:54 am

Nvidia buys UK’s Icera for $367m

Nvidia, the US chipmaker, on Monday announced a $367m cash deal to buy privately held UK rival Icera.

The deal will allow Nvidia to compete better with Qualcomm and Intel in the growing market for smartphone chips.

The sale of the Bristol-based chip company will also come as a relief to the European venture capital community, which has invested heavily in the company. VC companies including Amadeus Capital Partners, Atlas Ventures, Balderton Capital, Accel Partners and DFJ Esprit have poured about $250m into the company since it was founded in 2002. It has been one of the biggest recent investments in a European semiconductor start-up.

“It was such an iconic investment, if that had gone wrong, we would have been in real trouble,” said Hermann Hauser, founder of Amadeus Capital Partners.

However, the sale price is a far cry from the $1bn stock market flotation that Stan Boland, Icera’s chief executive and co-founder, had originally envisioned for the company.

“It is hard to be a small company innovating in the mobile space because it is a big boys’ game,” said Mr Boland, a serial entrepreneur. Being part of a large company such as Nvidia, he said, would give Icera the credibility it needed.

“We were aiming for an IPO for quite a long time but it is more important to make sure we can be successful for the long term.”

Mr Boland said he expected to remain running the Icera business for “several more years”.

Icera’s top management owned 20 per cent of the company and should receive more than $73m from the sale. This adds to the already considerable wealth amassed by Mr Boland and his co-founder Simon Knowles when they sold a previous chip company, Element 14, to Broadcom for $594m in 2000.

Icera, which makes an innovative type of radio chip for mobile broadband dongles and smartphones, is potentially a challenger to large US companies such as Qualcomm and Intel.

Its products had been approved for use by more than 50 mobile phone operators, including Orange, Vodafone and AT&T. However, it has struggled to secure deals in the mobile handset market and was yet to generate any cash.

The acquisition of Icera allows Nvidia to consolidate its already strong position in smartphones and tablets.

It made a breakthrough with its Tegra processor, which now powers some of the best-known tablets in the market, as well as the “super phones” such as the LG Optimus 2X and Motorola Atrix 4G.

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