July 9-10, 2013
San Francisco, CA

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The terrifying video of a Russian plane crash on a freeway was captured using a dashboard-mounted camera. Those cameras are going to become a lot more common for documenting driving, and Ambarella is going to make them more cost-effective.

Santa Clara, Calif.-based Ambarella designs low-power video chips used in all sorts of sports cameras and digital still cameras. But the new A7L-A chip it’s introducing today at the Consumer Electronics Show in Las Vegas is designed for use in car video cameras.

Cameras in cars have become like airliner black box recorders, capturing video proof in case of an accident, Ambarella marketing vice president Chris Day told me in an interview. They’re a lot more popular in places such as Russia, China, Taiwan, and Korea. But Day believes they will eventually equip cars in the West as well.

The new A7L-A is a version of the A7 chip that has been the workhorse of video cameras since 2010. It can capture decent image quality, even if you’re driving at night or at dusk. Video memory is integrated directly into the chip.

Rivals include CSR’s Zoran division as well as major Japanese and Korean companies that make chips for their own cameras.

[Image credit: the Telegraph]

The deal shows that there are still some cycles of consolidation and innovation that can happen in the security camera chip market, where the aim is to provide better and better imaging technology at lower costs. And it suggests that security cameras are going to get better and better, as is needed in an age where many people are worried about crime and terrorism.

Mountain View, Calif.-based Pixim makes image sensor chips with high-dynamic range, or the ability to discern images in scenes with low light and bright light at the same time, as pictured above. They’re ideal for security applications, allowing security guards to review a camera’s images and to make out a person’s face in a scene. Advasense Technology, based in Ra’anana, Israel, also makes next-generation CMOS (complimentary metal oxide semiconductor) image sensors for use in next-generation mobile applications.

Advasense has deployed several breakthrough innovations in high-resolution image sensors. Pixim, meanwhile, has seen strong growth of its Seawolf image sensor chips in the video security market. Pixim says that the Advasense team complements Pixim’s own engineering team in image sensor design.

The Seawolf chip can be used in devices such as web-connected security cameras at retail, banking, gambling, schools, transit, commercial and industrial sites. The Pixim chips compete with charge-coupled device (CCD) chips made by companies such as Panasonic and Sony. Pixim’s customers include Dallmeier, March Networks, Genie CCTV, Ovii, and UTC.

Pixim’s chips have been very popular in China. In the U.S., government agencies have been installing security cameras for Homeland Defense reasons. Corporations are also installing cameras that do a better job of capturing faces of people going in and out of buildings. In the United Kingdom, the government has also installed widespread security cameras to deter crime.

The deal creates a new powerhouse in consumer electronics and wireless technologies. CSR is a leader in personal wireless technologies such as Bluetooth, global positioning system (GPS), FM radio, and Wi-Fi. Sunnyvale, Calif.-based Zoran makes consumer digital technology chips such as those used in cell phones, digital cameras and home entertainment.

Under the deal, Zoran shareholders will receive 1.85 ordinary shares of CSR (in American depository shares) for each share of Zoran common stock. Cambridge, England-based CSR will also return up to $240 million to shareholders via a share buyback program.

The companies say they will integrate their technology to create chips for location-aware, connected multimedia devices. Both are large-scale publicly traded companies. In 2010, Zoran had pro-forma revenues of $441 million.

Zoran has always been strong in imaging and video, making chips for DVD players, digital cameras and other devices by the millions. CSR has a lot of wireless technology. But those technologies now have to be integrated into the same chip for connected digital cameras and other devices.

Both companies have around $50 million. By the end of 2011, the companies anticipate being able to cut around $50 million in costs. The price represents about $13.03 a share on Zoran’s common stock, not counting the $240 million share buyback. The deal is about 65 percent stock and 35 percent cash. And the price is a premium of 39.9 percent over the closing price of Zoran on Friday, at $9.32 a share.

Zoran has about $261 million in cash. Upon completion of the deal, Zoran will own 35 percent of the combined company. CSR executives will run the company, while Levy Gerzberg, CEO of Zoran, will join the CSR board as a non-executive director and Zoran will appoint another independent director. The deal is expected to close in the second quarter.

Joep van Beurden, chief executive of CSR, will lead the combined company. J.P. Morgan Cazenove and Rothschild acted as CSR’s financial advisers and Wilson Sonsini Goodrich & Rosati and Slaughter and May acted as CSR’s legal counsel.  Goldman Sachs & Co. acted as Zoran’s financial advisor and Jones Day acted as Zoran’s legal counsel. CSR’s revenues in 2010 were $800.6 million and its gross profits were $376.6 million.