Acquisition strategies don't work for everyone, but there are always exceptions: Chipmaker Xilinx looks to be a member of that select group.

Like Altera Corp. (Nasdaq: ALTR), which we looked at previously, Xilinx Inc. (Nasdaq: XLNX) has used its check book to further its strategy of providing systems vendors with a one-stop-shop for communications logic in optical transport, traffic management, packet processing, and high-speed Ethernet segments. (See The M&A Way to Achieve 400G Goals.)

The component pieces of Xilinx's one-stop-shop have been put together through a series of acquisitions, along with the company's core programmable logic technology. The result is a complete portfolio for service provider, enterprise, and data center markets.

Anyone who has experienced or studied corporate takeovers, or been closely involved in M&A activities, knows that acquisitions are not without pain for both parties. Given the breakneck speed at which Xilinx acquired its capabilities, especially during the past few years, it would appear the company has perfected an M&A formula that includes targeting the companies that have already provided it with market differentiation, and which are already familiar to Xilinx on a cultural as well as technological level.

The approach appears to have paid off. In its most recently reported financial quarter (ended December 28, 2013), the company reported a 15% year-on-year increase in revenues to $587 million and a 70% increase in net income to $176 million. The company's share price has risen by 50% in the past year to $54.64, giving the chipmaker a market valuation of $14.6 billion.

Let's look at the company's acquisition history, and what that has delivered.

RocketChips
RocketChips, acquired in October 2000, provided ultra-high-speed CMOS mixed-signal transceivers serving the networking, wireless and wired telecommunications, and enterprise storage markets. RocketChips' solutions included serial backplane transceivers (single and quad 3.125Gbit/s transceivers), telecom transceivers (SONET OC-48 and OC-192), enterprise storage transceivers (Fibre channel, Ethernet), and networking transceivers (Gigabit Ethernet, 10G Ethernet, and Infiniband).

Triscend
Xilinx waited until March of 2004 to go shopping again, purchasing Triscend, a provider of configurable embedded microcontroller (MCU) technology. Triscend's single-chip platform featured FastChip development software that delivered a ready-to-customize SoC (system on chip) integrated circuit with the flexibility of a field-programmable device, at the price of a standard product and no non-recurring engineering costs.

AutoESL Design Technologies
With the purchase of AutoESL Design Technologies in January 2011, Xilinx entered a fast-and-furious acquisition phase. AutoESL Design Technologies expanded the market for FPGAs to those designing at a higher level of abstraction using C, C++ and System C. By April 2012, the results were visible when Xilinx unveiled a C-based toolset redesign for programmable systems, the Vivado Design Suite. This IP and system software supported high-capacity devices, enabling faster integration and implementation for programmable systems into devices with 3D stacked silicon interconnect technology, ARM processing systems, analog mixed signal (AMS), and many semiconductor intellectual property (IP) cores.

Omiino
Two months later, in March 2011 as part of the Xilinx roadmap for support of FPGA-based line card designs for 100G and future 400G optical transport network (OTN) applications, Xilinx purchased IP-rich Omiino. As a result, Xilinx rapidly unveiled Virtex-6 HXT FPGA capabilities for 100G OTU4 OTN designs, eased transition from the 40-nm Virtex-6 to the more capable 28-nm Virtex-7 for 400G OTN and beyond, and shored up in-house OTN expertise. (See Xilinx Acquires Omiino, Demos 100G.)

Sarance Technologies
Sarance, considered a leader in MAC (media access control) and the Interlaken interconnect protocol, delivered a very configurable, highly-FPGA-optimized portfolio of chip-to-chip interconnects with a focus on the Ethernet, Interlaken, and network search engine segments. Xilinx purchased the company in March 2011 and was rewarded with the ability to more rapidly displace ASSPs and ASICs for 40G/100G and beyond. According to Xilinx, Sarance technology had the only IP technology capable of scaling to 400G rates for bridging in an FPGA. (See Xilinx Acquires Sarence.)

Modelware
The Xilinx purchase in May 2011 of IP vendor Modelware, a provider of traffic management/packet processing silicon intellectual property (IP) cores, rapidly showed traction as the company simultaneously unveiled FPGA-based 100G traffic management reference designs based on its Virtex-6 HTX FPGA. The management IP was aimed at mobile backhaul, PON aggregation, and data center applications. The highly integrated solutions helped Xilinx equipment-makers ramp up for the high bandwidth-granular services rollouts. It also became clear that Xilinx was going for a one-stop shop strategy for high-speed networks. (See Xilinx Acquires Modelware for 100G and Chipmakers Snack on Optical Designs.)

PetaLogix
In August 2012, the acquisition of PetaLogix, an embedded Linux solutions provider, enabled Xilinx to strengthen the company's position in the embedded market. Pre-acquisition, PetaLogix distributed Linux solutions for various processors such as MicroBlaze and PowerPC. Post-acquisition, it provided Linux solutions to the Zynq-7000 All Programmable SoC.

Modesat Communications
Xilinx purchased Modesat Communications, a high-performance wireless backhaul solutions provider, in September 2012. Modesat specialized in backhaul modem solutions for microwave, E-band and non-line of sight (NLOS) markets. Mobile backhaul platforms could now use Xilinx All Programmable 7 series FPGAs and Zynq-7000 SoCs in combination with Modesat wireless backhaul solutions. Customers could keep their proprietary IP and leverage the backhaul solutions and the flexibility of the Xilinx FPGAs and SoC devices, and so get to market faster. (See Xilinx Buys Into Backhaul.)

When the dust settled…
So, what does this M&A strategy mean and how do all these deals fit together?

According to Steve Glaser, SVP of corporate strategy at Xilinx, the company has "transformed itself from a supplier of programmable logic to what we call 'all programmable', with a focus on enabling ever-more integrated hardware, software and I/O programmable devices for smarter and more flexible networks and systems. This has driven a number of developments and acquisitions, including ARM-based SoCs, multi-die 3D ICs, next-generation design tools and methodologies, and a portfolio of SmartCORE hardware IP and key embedded software IP."

He continued: "The impact of this all-programmable portfolio on next-generation systems is most visible in communications, including OTN, SDN, data center appliances, wireless radios, and wireless backhaul," added Glaser. "However, Xilinx is also enabling smarter systems across a wide range of applications that include automotive driver assistance, industrial machine vision, machine-to-machine communications and connected control, software-defined radios, and smart energy."

An example of how this is playing out was the company's presence at this year's OFC, where Xilinx unveiled OTN reference designs that, the company says, give its customers the industry's only single-chip solution for 4x100G OTN transponders and 2x100G OTN switching apps. The reference designs, in combination with Xilinx All Programmable 3D ICs and SmartCORE IP, represent an evaluation platform that is fully featured for high-bandwidth OTN apps.

The reference designs are available, and feature: