MANHASSET, N.Y. — TranSwitch Corp. has gained a foothold in both standard chips and intellectual property cores in the Gigabit and 10G Ethernet world through the proposed acquisition of Israel-based Mysticom Ltd.

TranSwitch (Shelton, Conn.), plans to offer approximately $5 million of its common stock for Mysticom, with up to $10 million in additional stock or cash issued if Mysticom meets revenue and operational cash flow targets.

TranSwitch has expanded from an original base in telecom chips to a wide range of Ethernet switching logic, but the acquisition of Mysticom represents a significant expansion into mixed-signal transceivers.

According to TranSwitch chief executive Santanu Das, Mysticom’s wide range of interfaces, meeting such physical-layer standards as 100 Base CX4, LX4, and XAUI, was a key factor in drawing TranSwitch’s interest. TranSwitch intends to continue to sell existing Mysticom serializer/deserializer and transceiver chips, but also intends to integrate Mysticom cores into existing TranSwitch products such as Envoy, Phast, and EtherMap.

In the past, TranSwitch had acquired serdes cores for Gigabit Ethernet from third parties, but had difficulty finding a reliable supplier of 10-Gbit IP. Mysticom licenses such cores to a range of companies believed to include Texas Instruments and Samsung, and Das said that TranSwitch will continue all outstanding chip and core partnerships of Mysticom.

On completion of the deal March 31, 2006, Mysticom will be run as a wholly-owned subsidiary of TranSwitch. Das said TranSwitch has every intention of maintaining Mysticom’s engineering operation in Netanya, Israel.

Das told financial analysts in a Dec. 6 conference call that TranSwitch expects to achieve breakeven results the second half of 2006, with the Mysticom acquisition being neutral in terms of both cash flow and P&L.