Agere Systems Inc. (NYSE: AGR.A) today announced its designs on storming the access-networking market for network processors, the hottest segment -- relatively speaking -- for those chips.

Agere expects its new Advanced PayloadPlus 300 (APP300) line, a scaled-down version of the APP500, to become the majority of its network processor business, in terms of both volume and revenues. The chips are part of the umbrella brand "TrueAdvantage," which encompasses reference designs and software (see Agere Launches Access Processor Chips).

The change highlights the strength of the access market. Agere's network processor, like nearly every other company's, was devised with core networks in mind. Its first network processors came from a startup called Agere Inc., which was acquired by Lucent Technologies Inc. (NYSE: LU) in April 2000. In December 2000, Lucent spun off its chip business and named it Agere Systems (see Lucent Christens Its Spinoff).

Access is bustling because of the broadband buildouts occurring worldwide. "If you look at where they're spending the money, it's in access equipment," says Bill Klein, Agere's marketing manager for network processors. The APP300 "will become the leader" in revenues among Agere's network processors, he adds.

"The access market has been strong for network processors for some time," says Simon Stanley, analyst with Heavy Reading. He notes that Intel Corp.'s (Nasdaq: INTC) first network processor, the IXP1200, got most of its success in access markets.

Others have followed suit. Wintegra Inc. targeted access networks from the beginning, and the company expects to go public on that strategy. Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC), Stanley notes, is due to join the fun next quarter with its nP3705. And Intel has followed up the IXP1200 with the IXP2300 line, targeting access equipment (see Chip IPOs Almost Ready and Net Processors Sport New Look).

Intel has the advantage of just being Intel, but beyond that, Stanley doesn't see a clear favorite. "The Agere device has strong support for ATM interworking and traffic management, while the Intel devices have a higher-performance control plane processor. Wintegra has a highly integrated solution for the access market and may prove hard to beat on power and price."

But really, all of them might have to look out for Freescale Semiconductor Inc.'s (NYSE: FSL) new PowerQuicc III line of chips, which might provide "the strongest competition to Intel for this market," Stanley says.

Among the key applications in access is the IP DSLAM. Given the APP300's lower cost and smaller size, "Agere can compete effectively with Intel and Wintegra for these sockets," Stanley says. Agere also sees opportunities on the wireless side in Node B and Radio Network Controller (RNC) designs.

EZchip Technologies and Xelerated Inc., both of which have focused on 10-Gbit/s networking, "are paying some attention" to access by adding Gigabit Ethernet MACs and 5-Gbit/s capabilities, Stanley says, but he doesn't expect them to compete in the DSL arena. PMC-Sierra Inc. (Nasdaq: PMCS) could be a player there but offers non-programmable chips, he adds.

In addition to the APP300, Agere released a link-layer processor (LLP) chip today, a companion chip to the APP300 handling Layers 1 and 2 functions.

— Craig Matsumoto, Senior Editor, Light Reading

For more on this topic, check out the Heavy Reading report, Network Processors: A Heavy Reading Competitive Analysis.

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