Cisco Systems will buy a Chinese set-top box maker as the country works to digitize all cable television by 2015, creating market opportunities for Cisco, the company said late Monday.

Cisco will pay up to US$44.5 million for the set-top box business of DVN Holdings, a Hong Kong-based company with major operations in mainland China. Cisco will pay $17.5 million up front and make further payments as the business hits sales targets.

The move takes Cisco into a growing market. China's cable market is the largest in the world with 160 million subscribers, Cisco said. And sales of set-top boxes are growing fast in the country. In-Stat expects a record 20 million cable set-top boxes to ship in China this year. While Cisco and Motorola are the world's top two makers of the devices, another six of the top ten companies are Chinese, according to In-Stat.

Cisco will partner with the unbought part of DVN to provide integration and support services. It expects to close the deal in the first half of next year.

Cisco sees a business in set-top boxes as dovetailing with its sales of network products. The company aims for its new alliance to give customers an end-to-end product lineup for the shift from digital broadcast to interactive TV services, it said.