Broadcom Passes on 40-Gig
It seems like such a nice target. SMI has a near stranglehold on a small but important market: serializer/deserializer (SerDes) chipsets for 40-Gbit/s transmission. And yes, it's working on 100 Gbit/s, too. (See Sierra Strikes Forth for 100G.)
"I would estimate they control 75 or 80 percent of the PHY business. If you're doing 40 Gbit/s or 100 Gbit/s right now, you're almost definitely using their stuff," says analyst Andrew Schmitt of Infonetics Research Inc.
So, why did it sell for just $180 million, to a company that's not really in the communications market? Semtech Corp. (Nasdaq: SMTC), which announced the deal Nov. 19, sells some timing chips that can apply to Ethernet backhaul, and that's about it. Otherwise, the company focuses more on areas like power management. (See Semtech to Buy Sierra Monolithics .)
A quick ping to Broadcom didn't yield a response, but I'll swing a guess. SMI reports that its revenues in 2009 will be around $50 million. That's quite good for a privately held company that's had to survive the telecom drought. But to Broadcom, it's barely a soda budget.
Maybe Broadcom thinks the money is better spent on own SerDes (plural). I'd be surprised if Broadcom can't be ready by the time 100-Gbit/s volumes start to ramp.
— Craig Matsumoto, West Coast Editor, Light Reading