Last Friday, Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) laid off its Andover, Mass., software development team working on its network processor products.

AMCC says it doesn't consider the layoffs to be newsworthy, but other industry observers seem concerned.

One source suggests that the Andover team was responsible for the development of the software for the recently announced nP7510 -- likely to be the first OC192 (10 Gbit/s) network processor on the market (see OC192 Processors: Who's First?).

If true, this would be bad news for any customers who have just committed to the device. After all, if you get rid of the guys who understand the software, it becomes difficult or even impossible to fix bugs.

However, Robin Melnick, AMCC's director of product marketing for network processors, "categorically denies" the assertion that the Andover team was solely responsible for the development of the software for the nP7510. "We have a fairly large software development staff spread over three locations," he says, noting that teams at all three locations were involved in the development of the nP7510.

Furthermore, the Andover team, with around 16 people, was the smallest group, says Melnick. The other locations are Sunnyvale, Calif., and Raleigh, N.C.

However, it's also true that Andover is one of the original locations of MMC Networks, the company that AMCC bought in August 2000, in order to get its hands on network processors (see Applied Micro to Buy MMC for $4.5B). According to Melnick, the Andover location had responsibility for so-called "reference designs" in hardware, as well as language tools, such as compilers, and development tools like debuggers.

Some of these responsibilities were duplicated, and others will be consolidated at other locations, according to Melnick. But the main message from AMCC is that network processor rollout is unaffected. "All software projects are continuing," he claims. The change is "purely a management choice about how we want to align our resources for certain projects."

But although the software is assured continuity, the staff are not. "There may be an opportunity for a few to apply for jobs in other locations, but not for the majority," Melnick says.

In Melnick's view, snipping staff and cutting the number of locations is as much about AMCC digesting its acquisitions as it is about responding to the industry downturn. The company expanded over multiple sites as a result of various acquisitions it made during the course of 1999 and 2000. By streamlining the number of locations and managers, it believes it can cut costs and become more efficient.Back in July, the chip maker announced that it would be cutting staff by 5 percent.

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com