Hyperchip Raises $67 Million

Hyperchip Inc., a company that hopes to leapfrog routing specialists such as Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (Nasdaq: JNPR), and Avici Systems Inc. (Nasdaq: AVCI) by providing a product that can scale to petabit speeds, today announced it has secured $67 million from a syndicate of investors led by the Optical Capital Group (OCG), the optical incubator funded by Corvis Corp. (Nasdaq: CORV) founder and CEO David Huber.

The 10 new investors in the second round included a wide range of investment bankers and potential customers, indicating the company is broadening support for a potential IPO. In addition to OCG and five previous investors, new investors included Amerindo Investment Advisors, Enron Broadband Services (NYSE:ENE), and Morgan Stanley Dean Witter (NYSE:MWD).

Hyperchip, which is still developing the product, plans to break up its development into two stages, according to Hyperchip president and CTO Richard Norman. The first routing product, the Petabit Router (PBR) 1280 will be based on programmable chips, known as field programmable gate arrays (FPGAs), supplied by Xilinx Inc. (Nasdaq: XLNX). However, that first product will only scale to terabit speeds. A higher-speed product -- which will scale to petabit speeds -- will be based on ASICs being designed by IBM Corp. (Nasdaq: IBM) and will be available later next year. Custom ASICs cost more to develop than FPGAs but generally deliver better performance.

Why the need for a petabit speeds? Norman says that long-haul optical switching technology will change the network architectures of carriers, raising the need for more powerful routers in the core of the network.

“Optical switching is hot,” says Norman. “People want to replace all the routing with optical switching. Instead of routing 10 times in the core you will only route 2 times —- going into the core and then going out. You need a router that can scale to the total number of optical wavelengths. Instead of a lot of little routers everywhere, you need a few monster routers leading into the core.”

Norman, a former ASIC design software engineer at IBM, says the initial terabit-speed product will be in trials in the first quarter of next year.

Competitors have said Hyperchip’s success will depend on the quality of its software, and some have said its use of Nortel Corp.'s (NYSE: NT) Open IP routing software to help build its routing code will not be sufficient. Norman says the company is acquiring additional software to improve the routing code, with a focus on multiprotocol label switching (MPLS).

“We love MPLS,” says Norman. He said that competitors have exaggerated their dependance on Open IP software and that the company has acquired significant amounts of code from other sources.

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com