Two of the chip startups tapping the promising area of pseudowires have decided to combine forces.

Lycium Networks Ltd. and Redux Communications Ltd. announced yesterday that they had merged. As a wedding gift, they picked up an unspecified new round of funding from the companies' previous investors, a list that includes Accel Partners, Benchmark Capital, Delta Ventures Ltd., Genesis Partners, Giza Venture Capital, and Partech International.

The companies' announcement skimped on a few details of the deal -- the new company's name, for instance. At press time, executives were not available to fill in the blanks.

Both companies were developing chips for one of the hottest areas in telecom: pseudowires. The idea is to emulate Layer 2 connections or even private lines across an IP/MPLS network, a concept that ties into carriers' plans to converge multiple networks onto an IP/MPLS core. Some standards in pseudowire technology are being developed by the Internet Engineering Task Force (IETF)'s Pseudo Wire Emulation Edge to Edge (PWE3) working group.

The topic is even the subject of a Light Reading Webinar later today, entitled "Pseudowire Technology for True Convergence." The Webinar will include the results of a survey conducted by Heavy Reading, Light Reading's paid research arm.

Competitors for the Redux-Lycium pair include Zarlink Semiconductor Inc. (NYSE/Toronto: ZL), which announced a pseudowire chip about a year ago, and systems vendor RAD Data Communications Ltd., which has developed its own ASIC for this area.

Redux CEO Zeev Pritzker will retain his position at the combined company, as will Lycium CTO Ron Cohen. Benchmark Capital partner Arad Naveh had been acting as Lycium's CEO; he will join the board of the new company.

For the latest on the subject of pseudowires, check out today's Light Reading Webinar: Pseudowire Technology for True Convergence.

— Craig Matsumoto, Senior Editor, Light Reading