IBM and CommQuest Technologies Announce Merger Agreement

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Armonk, N.Y - 11 Feb 1998: .. IBM and CommQuest Technologies, Inc. today announced they have entered into a merger agreement. The merger will speed development of a new generation of multifunction, low-cost, mobile "information appliances," such as single chip, watch-size cellular phones and products that combine cell phone, e-mail and Internet access functions in a single hand-held package.

CommQuest, a privately held company based in Encinitas, California designs and markets advanced semiconductors for wireless communications applications such as cellular phones and satellite communications.

The merger will combine IBM's leadership in semiconductor technology and manufacturing with CommQuest's recognized chip design and system skills for wireless communications products. In addition, the merger expands IBM's strategy of providing key technologies to other companies on an original equipment manufacturer (OEM) basis. The companies will immediately broaden efforts to sell CommQuest products through IBM's extensive sales network.

The merger will also accelerate the use of IBM's unique silicon germanium semiconductor technology. Silicon germanium is an ideal technology for wireless communications applications because it can operate at extremely high speeds with low power requirements -- enabling the transmission and reception of high frequency signals while extending the battery life of hand-held devices.

CommQuest's team of skilled semiconductor design, software and system engineers will now bring the advantages of silicon germanium to the communications industry. Joint product development will also include the use of IBM's leadership copper chip technology, allowing further reductions in communications system power requirements.

"We believe joining with CommQuest to design high-speed communications devices using silicon germanium and copper will provide significantly lower cost chip solutions for manufacturers of communications products," said Dr. Mike Attardo, general manager, IBM Microelectronics Division. "Today's announcement is a key element of IBM's strategy to bring innovative, leadership technology products quickly to customers."

"Combining CommQuest's advanced system level chip architecture with IBM's semiconductor manufacturing will create a paradigm shift in the industry," said Dr. Hussein El-Ghoroury, president and CEO of CommQuest. "The joining of our patented CASP (Communication Application Specific Processor) design architecture with IBM's advanced semiconductor technologies will drive major advancements in leading edge wireless and digital applications."

Silicon germanium has been targeted as a potential semiconductor technology for years. However, IBM has perfected a unique method for manufacturing silicon germanium chips which requires only slight additions to standard CMOS (complementary metal oxide semiconductor) chip making processes -- dramatically reducing manufacturing costs. And, unlike exotic and expensive chip technologies like gallium arsenide, silicon germanium allows the integration of many thousands of transistors onto a single chip. As a result, fewer chips are required to carry out the same set of functions

The companies predict the characteristics of low cost and low power along with the ability to operate at high frequencies and integrate thousands of transistors, will result in silicon germanium becoming the core chip technology enabling a wide variety of hand-held communications and computing devices connected to voice and data networks. By leveraging the power of networks, these devices will allow individuals and organizations to increase productivity, boost collaboration and develop new ways of doing business.

Semiconductors used in digital wireless communications applications today represent a rapidly growing opportunity. Analysts expect chip industry revenues derived from these applications to grow more than 20 percent annually over the next four years.

The new organization will become a unit of IBM's Microelectronics Division. The merger transaction will be financed from IBM's cash on hand. Expenses associated with the transaction will result in a one-time charge against IBM earnings in the quarter in which the merger is completed. The final merger is contingent upon successful attainment of certain closing conditions and governmental approval.

Additional information about IBM is located on the Internet at The CommQuest web site is located at The Internet address for IBM Microelectronics is

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