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Broadcom Buys Israeli Chip Maker in $776 Million Deal

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When the going gets tough -- the tough go shopping.



, which has seen its share price drop more than $130 in November to within $10 of a 52-week low, announced Tuesday that it would acquire Israeli chip supplier



Broadcom will exchange 7.96 million shares of its stock for VisionTech. The stock is valued at $776.6 million based on yesterday's closing price of $97.56 The acquisition will become the core of a new Broadcom unit, called Broadcom Israel.

VisionTech makes the MPEG 2 encoder chip, Kfir-2,which handles both video and audio and can be found in many television set-top boxes. Scientific-Atlanta


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all use the Kfir-2.

The Kfir-2 has many uses, including the ability to handle Web surfing and interactive videoconferencing, but its most hyped feature is Personal Video Recording, or PVR. This feature allows viewers to pause live television events and record shows digitally.