Intel Corp. (Nasdaq: INTC) announced a deal Tuesday to acquire switch-chip company Fulcrum Microsystems Inc. , a move that puts Intel in the Ethernet business at a time when Ethernet switch prospects are looking hot.

The deal is expected to close by Sept. 30; terms were not disclosed.

Privately held Fulcrum, based in Calabasas, Calif., concentrates on the high end, touting itself as a vendor of 10Gbit/s and 40Gbit/s Ethernet switch chips. Fulcrum raised at least $55 million in 12 years, the last reported round being for $20 million, in 2005.

Why this matters
Broadcom Corp. (Nasdaq: BRCM) now faces tougher competition in Ethernet switching. Or, another way to put it: Little Fulcrum now has a linebacker of a chip company standing behind it and now has to be taken even more seriously.

In turn, that's important because these chips have become capable enough that OEMs can build powerful Ethernet switches without having to rely on ASICs. In other words, these switches are coming out faster than before, offering direct competition to Cisco.

And now, Intel might be able to boost the industry's capability to produce the chips that fuel these switches.

Broadcom is the big kahuna in Ethernet switching; other competitors include Marvell Technology Group Ltd. (Nasdaq: MRVL) and startup Centec Networks (Su Zhou) Co. Ltd.

For more
We've been following the chip industry's Ethernet push for some time, including a glimpse at Interop and a very revealing series of tests put on by Ixia (Nasdaq: XXIA) and Lippis Enterprises .

— Craig Matsumoto, West Coast Editor, Light Reading