Wipro buys Austrian chip design firm

Wipro Technologies, the global information technology services arm of Wipro Ltd, has acquired NewLogic, a system-on-chip design firm in Austria, for Rs 240 crore ($56 million) in an all-cash deal.

This is Wipro's fifth acquisition and the second largest in terms of deal size after Spectramind. Wipro will pay close to Rs 125 crore upfront, while the rest will be paid over a three-year period based on certain targets being achieved.

NewLogic's estimated 2005 revenue is close to $20 million and the company employs 120 professionals. This acquisition will strengthen Wipro's ability to provide semiconductor IP cores and complete system-on-chip solutions with digital and analog mixed-signal RF design services.

The acquisition also provides Wipro with access to 25 patent filings and over 20 customers such as Philips, Agere and Infineon in the product engineering domain.

The key element which this acquisition brings to Wipro is a royalty-based business model. So far, Wipro, in research and development services, has been banking on the licensing model which involves support services to customers.

"This is a significant change for us. NewLogic's customers are in the ramping-up stage and royalty-based revenue is about to take off," said Sudip Nandy, chief strategy officer, Wipro Technologies.

Hans-Peter Metzler, CEO of NewLogic, will head the new business unit and focus on meeting growing customer needs for innovative SoC solutions.