Earlier this week Cypress Semiconductor Corp. (NYSE: CY) announced its intention to acquire Lara Networks Inc. for $225 million in cash -- its biggest purchase ever (see Cypress to Acquire Lara Networks ).

It looks like quite a catch. Lara is reckoned to be the biggest vendor of network coprocessors -- chips used inside high-performance routers. The startup estimates that more than 50 percent of Internet traffic touches one of its chips on the way across the network.

Network coprocessors offload specific tasks from core network processors, to help routers process packets faster. These "hardware accelerators" can do the job much more quickly and efficiently than a software algorithm could in a network processor. It becomes a critical issue at line rates of OC192 (10 Gbit/s) and above -- routers simply can't run at wire speed without this kind of help.

Lara's list of customers includes Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (Nasdaq: JNPR), Foundry Networks Inc. (Nasdaq: FDRY), NEC Corp. (Nasdaq: NIPNY), Fujitsu Network Communications Inc., and Extreme Networks Inc. (Nasdaq: EXTR). Founded in 1997, Lara reported $20 million in revenues for fiscal year 2000, its first year of revenues. It employs more than 90 people, mostly around San Jose, Calif., but also in Bangalore, India.

Cypress appears to be developing quite an eye for a good buy in the high-end networking market. Its earlier acquisition of MEMS maker Silicon Light Machines brought it some unique MEMS (micro-electro-mechanical system) capabilities -- and also put it on the optical technology map (see Cypress Flexes MEMS Muscles).

It also bought HiBand Semiconductors Inc., a developer of high-speed serial silicon, in February 2001.

Those three wide-ranging acquisitions do add up to a strategy, according to Christopher Norris, VP of Cypress's data communications division. Cypress's aim in life, he told a press conference on Wednesday, is to be a one-stop shop for line card chips.



Some line card products, like framers, PHYs (physical layer devices), and programmable logic chips, have been developed in-house, says Norris. HiBand Semi filled a gap by providing OC192 capability for the backplane, with chips that help get data off a line card.

Silicon Light Machines added optical expertise to the portfolio, which is needed on the port side for bringing optical signals onto the line card. It has yet to unveil products that address line cards, but the possibilities are interesting because its MEMS technology is compatible with CMOS (complementary metal oxide semiconductor) processing used to make chips.

"Lara Networks is especially significant because it bridges the gap between the port and the backplane," says Norris.

Lara's flagship product is a database search engine that can search 100 million database entries per cycle (see Lara Releases Search Engine). The startup's competitors in this area are Mosaid Semiconductor, NetLogic Microsystems Inc., and SiberCore Technologies.

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com