Silicon Access insists it has a contract to provide Huawei with network processors, but some say the deal's not done

April 28, 2003

3 Min Read
Huawei Chip Deal: Who's Got It?

Back in February, officials at Silicon Access Networks Inc. crowed about a design win inside a core router for Huawei Technologies Co. Ltd., with further wins to follow. Now, competitors are saying that the startup is just one of a handful competing for the business and that a signed design win is more hope than reality -- accusations that Silicon Access denies.

One competitor, requesting anonymity, told Light Reading that Huawei was as surprised as anyone to see the contract win announced and that Huawei assured them a final decision had not been made (see Silicon Access Nabs Huawei).

"We were actually in China meeting with them at the time of the press release. We asked them what's going on, they were, like, 'No, we haven't made a decision yet!' " the competitor says. "I know Huawei is intrigued with this product and they may use it, but at the time of the announcement it was hardly a done deal."

Silicon Access officials stand by their story. Chief operating officer Rex Naden wouldn't elaborate much, citing Huawei's reluctance to publicly disclose its plans, but he says Silicon Access "absolutely" has a signed contract with Huawei, with revenues on the way.

"What I can say is that we have an extremely deep and long-lasting relationship with Huawei, and it's gotten a lot deeper since we last talked to you. Nothing's changed," Naden says.

Naden theorizes the rumor's being spread by less successful competitors trying to save face. "Clearly there are some competitors that are really scared. I can't blame them."

At press time, Light Reading was unable to reach Huawei for comment.

Competitors concede that Silicon Access could still win the contract, but they remain adamant that Huawei hasn't made its choice yet.

This much appears certain: Huawei would like to use an off-the-shelf network processor and traffic manager for an upcoming core router with 10-Gbit/s ports. A switch fabric might be part of the deal, too; sources say Huawei hasn't committed on whether to use its own fabric.

Huawei had settled on the PowerNP network processor from IBM Corp. (NYSE: IBM). But IBM reportedly has pulled development of that product, choosing instead to design network processors from its PowerPC chips.

The Huawei win might be more symbolic than substantive, in any event. It's unclear what volumes would come of Huawei's 10-Gbit/s box. Moreover, Huawei aggressively squeezes down prices, limiting the profits for its vendors. "They do lead with price on every conversation," the Silicon Access competitor says. "It's like a broken record."

Naden also declined to comment on Silicon Access's headcount, saying the figure is still the same as it was in February. But, like every telecom-related company, Silicon Access has had to make cuts. In 2000, when engineering talent was hard to come by, officials boasted of having a staff of more than 200 and a maelstrom of unsolicited resumés still pouring in.

At least 150 of the staff were cut last year, according to analyst firm The Linley Group, and the company removed a switch-fabric chipset from its roadmap. But the company had enough support to raise $39 million a year ago, bringing its funding total to an estimated $124 million (see Silicon Access Closes $56m 3rd Round and Silicon Access Raises $39M).— Craig Matsumoto, Senior Editor, Light Reading

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