Light Reading
Ethernet chip specialist consolidates its expansion strategy with the planned acquisition of fellow network processor vendor.

EZchip Strikes $130M Deal to Buy Tilera

Ray Le Maistre
7/1/2014
50%
50%

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
Flash Poll
From The Founder
Is your network built on 'The Old IP,' or are you part of 'The New IP' revolution?
LRTV Huawei Video Resource Center
Innovating Access Technology With G.fast

10|1|14   |   3.42   |   (0) comments


Exploring the potential of G.fast technology from the point of view of the Broadband Forum, Huawei – and an end-user.
LRTV Documentaries
A Cultural Shift for an OTT World

9|26|14   |   01:41   |   (3) comments


Telcos need to embrace a new approach to partnerships if they are to generate extra revenues quickly and give customers what they want.
LRTV Documentaries
New Skills Needed as Telecom, IT Collide

9|26|14   |   4:07   |   (1) comment


As telecom and IT collide, new technologies are emerging, new skills are needed and new opportunities for women are arising.
UBB Forum News
Do IP Networks Need An Overhaul?

9|25|14   |   02:01   |   (0) comments


As traffic levels ramp, do IP networks need new technologies and topologies?
LRTV Documentaries
Sprint Wields Its Influence in the Valley

9|25|14   |   3:09   |   (11) comments


Anne-Louise Kardas, Sprint's connection to startups in the Valley, explains how telcos can be innovative and find new opportunities with partners.
LRTV Documentaries
SDN, NFV & The Future of XO's Network

9|25|14   |   3:47   |   (1) comment


XO Communications COO Don MacNeil explains how cloud, SDN and NFV are altering its network requirements as well as changing data centers of the future.
UBB Forum News
The OTT Conundrum

9|24|14   |   01:39   |   (0) comments


What is holding back prosperous partnerships between telcos and the OTT players?
LRTV Documentaries
Putting Broadband to Work

9|24|14   |   01:26   |   (0) comments


High-speed broadband network rollout is key to telco strategies, but it's what happens after the network is built that counts.
Light Reedy
Light Reading's Women in Telecom Recap

9|24|14   |   0:55   |   (4) comments


Our first Women in Telecom breakfast was a huge success, and we hope you'll join us in London for the next event on November 6.
UBB Forum News
Monetizing Ultra-Broadband

9|24|14   |   01:43   |   (2) comments


Ultra-broadband networks need to be built, with fiber-to-the-premises the ultimate goal, but they need to be monetized, too.
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Half of the world's population will be connected to the Internet by 2017, but not just by smartphones and desktops.
Hot Topics
Facebook Pokes Around LTE Direct
Sarah Reedy, Senior Editor, 9/25/2014
Is Redbox Instant Shutting Down?
Mari Silbey, Independent Technology Editor, 9/30/2014
Sprint Wields Its Influence in the Valley
Sarah Reedy, Senior Editor, 9/25/2014
US Ignite Cultivates Gigabit Apps
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/25/2014
SoftBank Eyes a DreamWorks Buy – Report
Sarah Reedy, Senior Editor, 9/29/2014
Like Us on Facebook
Twitter Feed