Sony to buy chip firm Altair to bolster its IoT business

The latest multinational to take advantage of Israeli tech is Japanese conglomerate Sony – which is buying Hod Hasharon-based Altair Semiconductors, a developer of 4G (LTE) chips for devices.

The deal, first reported early Thursday in Israeli business media, is said to be worth $220 million. Neither Altair nor Sony Israel would comment, but the Hebrew-language “People and Computers” web site said that “sources close to the company confirmed it.” The company has about 180 employees in Israel, and has five other offices, including four in Asia – in China, Taiwan, Japan, and India.

Sony now becomes one of the few – and the most prominent – Japanese firms to open up shop in Israel. Traditionally very cautious when it comes to doing business in Israel, Japanese firms have slowly come around to the idea that Israel has technology essential to their future growth.

‘It could be a landmark’

“Over the past year, there has been a noted increase in the interest of Japanese companies in Israel in a variety of fields, evidenced by the arrival of Japanese companies to Israel and their willingness to host Israeli companies in Japan,” according to said Amit Lang, Director General of the Israeli Ministry of Economy, who recently inaugurated an Israeli trade office in Osaka.

But the Altair deal is in a different league from previous ones between Israel and Japan – and it could be a landmark one for both Israel, and for Sony, said Shlomo Gradman, CEO of ASG Ltd., and chairman of the Israeli High Tech CEO Forum. “It’s a win-win. Sony gets entrée into new markets, like the Internet of Things, that it did not have access to before, while Israel gets the presence of a true multinational – one of the few from Japan, setting a precedent for others from that country,” said Gradman.

The 4G, also known as LTE (Long Term Evolution) communications standard is considered by telecom pros to be the next big thing in cellphone data communications. Currently, most people still use devices that support the 3G (the G in each term refers to generation) standard. But with speeds up to ten times faster than those available with 3G, more device manufacturers are coming out with products that support 4G.

So far, industry experts say, 338 telecoms operators in 101 countries have adopted, or are planning to adopt, LTE as the next generation communications standard for their smart devices. As many as one billion people could be using devices that include LTE chips.

Among them are hundreds of thousands of Chromebook users, who bought their Google operating system-equipped devices from HP, Asus, and other manufacturers. In 2014, several companies, including HP and Asus, announced that they were adopting Altair’s 4G chips for their “always on” Chromebooks — the cloud-connected notebooks based on Google’s Chrome operating system, running Google apps -– to allow users to connect to the Internet anywhere, anytime. Those models use Altair’s FourGee-3100/6202 LTE chipset, which is certified to run over Verizon Wireless’ 4G LTE network, providing users with a 100Mbps broadband internet connection, even when wifi is scarce.

Expanded horizons

But Altair has since expanded its horizons. Last month, Altair opened a new R&D center in Taiwan, to support what it said was its “technical advancement” in the country. The new center, the company said, would help the company expand beyond laptops and cellphones, and tap into the growing Internet of Things device manufacturing business.

That could be a key to Sony’s decision to buy Altair. While Sony makes smartphones, it also makes a lot of other things, and the company is seeking a greater foothold in the IoT business, according to Izumi Kawanishi, EVP, Product Business Group, Sony Mobile.

“Sony Mobile regards the push into the realm of IoT and our strategies for diving into this market are critically important,” Kawanishi wrote in a recent blog post. “There can be little doubt that the market for network-connected devices – of every shape, size and type – will explode at breakneck pace going forwards.”

IoT is a key area for Sony – and outfitting its devices with Altair’s fast 4G chips could give it an advantage in a crowded marketplace. “Sony is not a maker of phones,” said Gradman. “It is a maker of consumer electronics, and it is looking for new opportunities in that area. Altair’s tech, they apparently believe, will help them take advantage of those opportunities.” IoT, which involves, among other things, outfitting common consumer products like refrigerators, televisions, and other things with smart communications technology, is certainly on Sony’s radar, added Gradman.

Whatever Sony’s intent, they’re welcome here, said Gradman – and he hopes they bring some friends, too. “It’s a great thing for the Israeli tech industry to team up with a company like Sony. They are joining a large community of multinationals that have found great technology in Israel, and we hope more Japanese firms will follow in their wake.”