Light Reading

EZchip Strikes $130M Deal to Buy Tilera

Ray Le Maistre

Ethernet chip specialist EZchip has struck a $130 million deal to acquire fellow network processor vendor Tilera as part of its strategy to expand into the data center and "white box" components market.

EZchip Technologies Ltd. (Nasdaq: EZCH), which just won the Outstanding Components Vendor award at this year's Leading Lights awards, said the deal, which is set to close in the third quarter, will accelerate its expansion into new markets, broaden its product portfolio and customer base, and double the size of its addressable market to $2 billion. (See Leading Lights Awards 2014: The Winners and Leading Lights Finalists 2014: Outstanding Components Vendor.)

The company will pay $50 million in cash when the deal closes, then up to $80 million in performance-related payments post-acquisition. Tilera Corp. has about 115 staff currently, and it's unclear how many of those will join EZchip's 200-strong workforce. Tilera CEO Devesh Garg is making the move, though, and will become EZchip's president in charge of US operations.

EZchip, which reported a 30% year-on-year increase in revenues to $71 million in 2013, expects the acquisition to slightly dent its earnings in 2014 but boost its profits from 2015 onwards. The company's share price increased by 2.8% to $26.52 on news of the acquisition.

(UPDATE: During the Tuesday investor conference call, EZchip's management revealed that Tilera's 2013 revenues were $35 million, but noted that this figure could dip below that level for 2014 before exceeding $35 million in 2015. The Tilera business is expected to deliver non-GAAP gross margins in the range of 60-65%, compared with EZchip's 80%.)

According to EZchip, the acquisition adds 100 customers, significantly expands the company's presence in the US (Boston and Silicon Valley), gives it a ready-made position in the multi-core CPU and adapter card market, and provides it with the portfolio it needs to target the cloud and data center markets it had already identified as part of its growth strategy. In addition, Tilera holds more than 100 patents.

Multi-core CPUs are used in a broad range of IT and networking elements, including routers, cloud computing platforms, and video and voice encoders to enable functions such as security, deep packet inspection (DPI), monitoring, and load balancing. In addition, multi-core CPUs will play an important role in meeting the packet and application processing demands of NFV and SDN deployments. (See Tilera Launches Open Virtual Switch Solution (OVS) to Accelerate NFV and SDN.)

EZchip plans to integrate Tilera's multi-core CPUs with its existing NPS network processor unit to create a high-end component that supports separated data plane and control plane processing.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Telecom Innovators Video Showcase
Automate, Scale & Create With Juniper's vCPE Solution

10|1|15   |   6:34   |   (0) comments

Join Kireeti Kompella, Juniper Networks CTO, and Steve Saunders, Light Reading Founder and CEO, as they discuss Juniper Networks' approach to NFV showcased with a turnkey vCPE solution, which demonstrates how service providers can use automation to rapidly deploy services.
LRTV Interviews
Gigabit Europe: Day 1 Takeaways

9|29|15   |   05:47   |   (5) comments

Light Reading's Ray Le Maistre and Iain Morris sup a beer and discuss some of the key takeaways from the first day of Gigabit Europe 2015.
LRTV Interviews
Gigabit in Europe

9|29|15   |   04:24   |   (0) comments

At the Gigabit Europe 2015 event in Munich, Heavy Reading's Graham Finnie talks about the availability of gigabit broadband in Europe.
Women in Comms Introduction Videos
AT&T's Band of Women

9|28|15   |   4:36   |   (0) comments

Brooks McCorcle, the president of AT&T's partner solutions divisions and a mathematician by trade, shares stats on AT&T's diversity and advice on how to create your own band of women at work.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Communication service providers realize that an ICT transformation is critical to their long-term survival, but most haven't yet committed to making it happen.
Hot Topics
Google Gives Huawei a US Device Boost
Dan Jones, Mobile Editor, 9/29/2015
Verizon's Go90 Is Live – Will Anyone Watch?
Mari Silbey, Senior Editor, Cable/Video, 10/1/2015
Eurobites: Dunroamin'
Paul Rainford, Assistant Editor, Europe, 10/2/2015
Good News for NFV Interoperability
Steve Saunders, CEO and founder, Light Reading, 9/29/2015
TiVo Takes Aim With Bolt
Mari Silbey, Senior Editor, Cable/Video, 9/30/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
Hold My Calls, Indefinitely Click Here