Huawei Is Dear to Agere

In a gloomy year, Agere Systems (NYSE: AGR) has found a reason to smile, in the form of a significant contract to supply Chinese telecom equipment giant Huawei Technologies Co. Ltd. with components (see Agere Ships Chips to Huawei).

The companies aren't revealing the amount of the "multimillion-dollar" deal nor the specific components involved, other than to say it embraces seven devices, including the MARS 2.5G and MARS 10G framer chips introduced earlier this month (see Agere Intros Transport Chips).

For now, the announcement means Agere will provide nearly all the line-card components for Huawei's Optix 2.5G, Optix 10G, and Optix Metro systems. But Agere also has a design win in an unspecified next-generation box, and Huawei will be invited to help define the chips being developed for that job.

"We will give them access to our next-generation devices, and, where it makes sense, they're going to have input into what they want to see," says Samir Samhouri, director of marketing for Agere's access and transport division.

The deal follows last year's announcement that Huawei would use Agere's network processors and switch fabrics (see Agere Announces China Deal). Agere has become Huawei's top semiconductor supplier in terms of revenues, Samhouri said.

The deal reflects a shift in the sales plans of broad-based suppliers such as Agere. Rather than chase down single-socket wins, Agere is trying to develop "platform-based wins" that span entire line cards or subsystems, Samhouri says. "This is going to be the norm for us."

This was always a good idea, since it means more sales for the component vendor. But thanks to the sagging economy, it's become more of an imperative for the remaining suppliers, and the strategy is being pursued by "everybody who as the ability to do it," says Arnab Chanda, analyst with Lehman Brothers.

Obviously, the deal is also significant because of Huawei's status, Chanda said. Huawei is certainly a big deal in China but increasingly is being taken seriously as a global competitor (see Has Huawei Got Cisco's Number? ). "It's obviously one of the few companies in the systems business doing well," he says.

Just as systems vendors worry about their chip suppliers going under, the chip companies worry about the viability of their customers.

Even startups such as Azanda Network Devices are beginning to limit their roster of customers to the established Tier 1 companies. Azanda was forced to scale back its traffic management chip, offering a 2.5-Gbit/s device instead of its hoped-for 10-Gbit/s chip (see Azanda Flips Its Chips). In the process, the company also chose to limit its business to large vendors, or at least those with product already shipping, says Greg Wolfson, its vice president of marketing.

— Craig Matsumoto, Senior Editor, Light Reading

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Godzila 12/4/2012 | 9:31:43 PM
re: Huawei Is Dear to Agere Didn't Agere sell other stuff to China? Like ASICs or FPGA's?

Where did this business go? I wonder if these design wins are just a small part of larger deal with China.
AgentSmart 12/4/2012 | 9:31:33 PM
re: Huawei Is Dear to Agere The news that Agere is supplying optical components to Huawei is incredibly disturbing and deserves an explanation from Agere in light of recent press reports and briefings by US Defense officials.

Folks may recall just a few weeks ago that DefSec Rumsfeld & his Joint Chief of Staff told reporters that US pilots continue to be targeted in the now-fly zones by Iraqi anti-aircraft equipment linked by sophisticated fiber optic networks--and US pilots have to continually bomb to take these networks out. Press reports over the past year have identified Huawei as the chief culprit in our industry that is supplying this equipment.

Put simply, US pilots are threatened by an Iraqi air defense network reportedly supplied by Huawei that could very well contain US technology supplied by Agere." Now, that makes me mad!

Currently, the US House of Representatives is considering a bill called the Export Administration Act that would loosen export controls over dual-use technologies - manufacturing processes and other products with civilian and military uses. This legislation would make it easier for US companies like Agere to export components/products that leaders like Saddam could use to enhance their military capability.

I hope that folks at Agere know what they are getting into and take the steps to make things right.
billy_fold 12/4/2012 | 9:31:29 PM
re: Huawei Is Dear to Agere Excellent post if what you say is true. If it is true, I doubt Agere even cares (cynical of me, isn't it?).

maryhadalambda 12/4/2012 | 9:31:27 PM
re: Huawei Is Dear to Agere Maybe they should bomb some fiber optic networks over here to take out the overhead supply
ww2 12/4/2012 | 9:31:23 PM
re: Huawei Is Dear to Agere Huawei being a supplier to Iraqi air defenses seems well established. See the following web links:





Many more references can be found in Google by searching +Huawei +Iraq
Iipoed 12/4/2012 | 9:31:22 PM
re: Huawei Is Dear to Agere Yeah, so what. Do you doubt that there is not Cisco, Nortel, Lucent etc, etc etc equipment in the Iraq Military Infrastructure.

What is your post trying to accomplish?
uttkadae 12/4/2012 | 9:31:21 PM
re: Huawei Is Dear to Agere Evidently Huawei also supplied equipment to the Taliban...
yikes_stripes 12/4/2012 | 9:31:20 PM
re: Huawei Is Dear to Agere Very funny!
Lopez 12/4/2012 | 9:31:20 PM
re: Huawei Is Dear to Agere Evidently Huawei also supplied equipment to the Taliban...

The same Taliban that banned the internet? Wow, that was a major customer win!
ivehadit 12/4/2012 | 9:31:18 PM
re: Huawei Is Dear to Agere i can't believe this discussion.

most of the stinger missles the taliban have/had were supplied by our government!

most of the fiber cable used in iraq came from corning or OFS (guess)

most of the multiplexers used in iraq came from alcatel (guess), the wireless phones were made by nokia or motorala (guess). lets ban all of them!

so what does all this prove. what goes around comes around.

folks, stigmatizing a competitor does not good business make. you have to win your battles on the battlefield, not with sniping attacks.
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