Mosaid Cans CAMs
Used for storing large routing tables, CAMs have yet to grow beyond a niche market. Sales of ternary CAMs, an advanced type often sold as adjuncts to network processors, totaled $78.8 million in 2002 and will rise to only $200 million by 2007, according to figures from Semico Research Corp.
Mosaid's decision, announced this morning, is part of a larger restructuring. Mosaid will stop selling chips altogether and return to its main business of memory test equipment. The company will continue developing chip designs to be sold or licensed to other vendors (see Mosaid Discontinues CAM Line).
Mosaid is laying off 34 of its roughly 70 employees.
Mosaid tried to sell its CAM business, which was losing $1 million per month. But as many chip companies have found, buyers only want the technology and not the people. "Potential buyers appear to be only interested in our product lines, IP [intellectual property], and customer base, and not in our [CAM] business as a concern," CEO George Cwynar said during a conference call with analysts.
As a consequence, companies have been dropping out. Music Semiconductors Inc. declared bankruptcy early in 2002 and sold one of its CAM lines to Micron Technology Inc. -- but Micron would drop that product line about a year later. Separately, longtime CAM believer Kawasaki LSI Inc. has stopped development of its largest ternary CAMs.
IBM Corp. (NYSE: IBM) chose not to get into the business at all, selling its completed CAM designs to market leader Integrated Device Technology Inc. (IDT) (Nasdaq: IDTI) (see IBM Sells Off Search Engines).
Some startups remain, most notably NetLogic Microsystems Inc. and SiberCore Technologies, each of which holds about 10 percent market share, according to analyst Rhondalee Donovan, Semico director of wireline communications. "The hope for companies in that position is that the market will change over time. One of the reasons IDT has such a stranglehold is their relationship with Cisco," she says.
In fact, IDT had a 53 percent market share in ternary CAMs last year, Donovan says, a reflection of the fact that Cisco remains the dominant consumer of ternary CAMs. Cypress Semiconductor Corp. (NYSE: CY) ranked second in ternary CAMs with 20 percent share.
CAM vendors have expected to see their market expand as the use of network processors grows, but Donovan notes they're facing increased competition from alternative technologies. Some network processors supposedly can operate without a CAM; moreover, some startups are examining algorithmic tricks that would obviate the need for one (see Search Engines Face Software Challenge).
Still, new CAM players continue to arrive. Music Semiconductor has emerged from Chapter 11 bankruptcy, and newcomer CMOS Micro Device Inc. showed off its CAM designs at the Network Processors Conference last summer (see Music Plays On and CMOS Improves TCAM).
— Craig Matsumoto, Senior Editor, Light Reading