In a bid to ease its financial situation and also to concentrate on its core businesses, Advanced Micro Devices decided to sell off its digital television (DTV) business to Broadcom Corp. This will bring a lot of benefits to Broadcom and will essentially cut-off AMD’s ability to compete in the consumer electronics (CE) space.

Broadcom will pay approximately $192.8 million in cash in exchange for AMD’s DTV assets. A portion of the consideration payable to AMD will be placed into escrow pursuant to the terms of the definitive asset purchase agreement. In connection with the transaction, approximately 530 members of AMD’s dedicated DTV team, in addition to certain employees directly supporting this team, located in six primary design centers around the world, will be invited to join Broadcom.

The acquisition of AMD’s DTV business is expected to enable Broadcom to immediately scale its DTV business, and, in conjunction with its existing products, to offer a complete product line that covers all segments of the DTV market ranging from low-end value and mid-range quality to high-end interactive platforms and panel processors. The acquisition also is intended to expand Broadcom’s existing tier one customer base, which includes the top DTV brands worldwide. This deal aims to enhance and strengthen Broadcom’s innovative DTV system solution offerings while delivering the scale and focus needed to forge a market-leading DTV business.

“The acquisition of AMD’s DTV business, which will become the core of Broadcom’s DTV line of business, will enable us to significantly scale and accelerate the completion of our digital TV product portfolio while also expanding our tier one customer base and positions us to achieve leadership and long-term growth in this important market segment,” said Daniel Marotta, senior vice president and general manager of Broadcom’s broadband communications group.

AMD’s DTV product line includes all Xilleon integrated DTV processors and complete turnkey reference designs, as well as NXT receiver ICs, the Theater 300 DTV processor, and a line of panel processors that perform advanced motion compensation, frame rate conversion and scaling.

AMD got its DTV business unit when it acquired ATI Technologies back in late 2006. Since that time, revenues of its consumer electronics divisions has been dropping and AMD even had to write down over $800 million of intangible assets recently due to lower than expected financial performance of the CE business unit.

“AMD is executing a strategic plan to transform the company, becoming leaner and more focused while seeking to create a business model to deliver sustainable profitability. The sale of our DTV business is a key step in AMD’s transformation, helping to strengthen our balance sheet, lower our breakeven point, and hone our focus in order to take full advantage of our position as a leader in both microprocessors and graphics technology,” said Dirk Meyer, president and chief executive officer of AMD.

The board of directors of each company has approved the transaction and shareholder/stockholder approval of the transaction is not required by either company. The closing, which is targeted to occur during Broadcom’s fourth quarter ending December 31, 2008, remains subject to customary closing conditions and review by relevant regulatory organizations. Broadcom may record a one-time charge for purchased in-process research and development expenses related to the acquisition in the quarter in which the transaction closes.