Intel-Stanford Deal is Cable Chip Play

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Silicon giant Intel Corp. made its long-awaited entry into
the cable market, buying the telecommunications-components business of Stanford
Telecommunications Inc. in an all-cash deal.

The acquisition immediately gives Intel a commercial
portfolio of cable-modem, set-top-box and headend-component products, vaulting it into a
rapidly growing broadband-communications sector now dominated by such vendors as Broadcom
Corp. and Texas Instruments Inc.

Stanford -- which is divesting the
telecommunications-components business as part of its own acquisition by Newbridge
Networks Corp. -- has a customer list that includes General Instrument Corp., Com21 Inc.,
Hybrid Networks Inc., Tellabs Operations Inc. and NetGame Ltd.

Intel has made no secret of its ambitions to be a major
player in the broadband-communications arena. But beyond an aborted attempt to acquire
chip-maker Libit Signal Processing Ltd., it has yet to commercially produce silicon for
cable modems or headend equipment.

The Stanford deal mirrors other moves Intel has made to
expand or create a presence in key areas such as high-speed networking, which it
accomplished with its buyout of integrated-circuits provider Level One Communications Inc.
earlier this month.

"It's similar to what we did with Level One in the
communications space generally, which gave us a whole lineup of communications
chips," Intel spokesman Tom Beerman said.

Stanford's subscriber-products lineup includes
modulator/demodulator chips required for full two-way interactivity, such as its
"STEL-2176," which provides all physical-layer receive and transmit functions on
a single chip.

The company also makes a wide range of application-specific
ICs for a variety of digital-communications platforms, including digital-subscriber-line
service.

Intel had already been active in the
research-and-development side of the cable-data business.

The company worked with Libit to create a draft
specification for Cable Television Laboratories Inc. for host-based cable modems, which
backers said would be dramatically cheaper than current designs because much of the
modems' processing power would be provided by their host computers.

Intel reportedly made buyout overtures that were rejected
by Libit -- one of only two providers of silicon in modems with CableLabs interoperability
certification -- before TI swept up the company.

The Stanford business will be integrated into Intel's
network-communications group, which, in the short term, will continue to sell Stanford
products.

In the future, Intel plans to add more people and other
resources to the division, but the firm would not immediately disclose any details of its
plans.

Newbridge will retain Stanford's wireless-broadband product
and satellite-personal-communications groups, and the company indicated that it would
continue to rely on the telecommunications-products division for chips.

"The cable and broadband-wireless market segments
share similar technical challenges," said Conrad Lewis, executive vice president of
Newbridge's access-products group, in a prepared statement.

"We believe the combination of Stanford's silicon
technology and Intel's technical and marketing strengths will help to overcome these
challenges and accelerate the deployment of cable and broadband-wireless solutions
industrywide," he added.

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