The deal in which Texas Instruments acquired Israeli company Butterfly for $50 million is intended to cut the time it will take the US giant to enter the wireless telecommunications market. By means of the deal, Texas Instruments plans to become a main producer of domestic wireless communications systems conforming to the cellular and computer communications standards taking shape in various centers around the world at present.
Electronic components producer Texas Instruments today announced the agreement to acquire Israeli company Butterfly for 50 million. Butterfly is considered a world pioneer in the development of wireless communications technologies for ranges of up to 100 meters, an extremely new field. As yet, there is no comprehensive market research into this area, but the global market is currently estimated at several hundred million dollars.
Butterfly was founded in 1992 by Amit Heller, and develops electronic chip kits with integrated software enabling electronic equipment makers to give their products wireless communications capability at frequencies between 900 MHz and 2.4 GHz. It operates out of Kfar Saba and Santa Clara, California, and employs sixty people.
Butterfly’s products are aimed at the domestic and home computer markets (SOHO). It supplies component kits called Monarch and Apollo which give cordless telephones and personal computers wireless capability. Another product line is Admiral, a chip set for input devices such as wireless keyboards and data communications terminals.
"The combination of Butterfly and Texas Instruments will provide a perfect system solution for wireless connectivity for the consumer market in all areas: voice, data, control, and multimedia applications," says Gilles Delfassy, vice-president and general manager of TI's worldwide wireless communications business unit.
Globes: What will Butterfly’s function be in Texas Instruments?
Delfassy: "In recent years, Texas Instruments has focused on developing applications and equipment for the digital signal processing (DSP) market. This is the fastest growing area in telecommunications, within which wireless communications has the fastest growth rate. This is where Butterfly comes in: we have DSP technology, wireless technology, and cellular technology, and Butterfly has very good technology for short-range wireless communications."
How will it be integrated into Texas Instruments?
" Butterfly is becoming a wholly owned subsidiary under the name Texas Instruments Israel. It will serve as the core of our short-range communications activity. It will be part of the wireless communications business unit I manage, which today supplies chip kits for 50% of the world’s digital cellular telephones."
What are the next steps?
"We’re not commenting on future investment plans, but Texas Instruments is a big player in the chip market, and now that it has come to Israel, it is open to further deals."
Butterfly president Amit Heller, 29, set up the company as soon as he was demobilized from the IDF. Before founding Butterfly, Amit served in an IDF research and development unit as a development engineer and as a project manager. The main shareholders in the company are: Amit Heller; Gidon Barak, one the founders of Videonet, which closed down; and the Genesis, Gemini, Apax, and Giza venture capital funds.
The acquisition, Amit explains, enables Texas Instruments to increase its chip production capacity in its fabs around the world. "To us, it gives access to the world’s leading technology in the field, and strong access to the markets, but we remain an independent profit center within Texas Instruments. In addition to the amount paid for the acquisition, tens of millions of dollars more will be invested in Israel in the next few years," he said.
Published by Israel's Business Arena on January 20, 1999