Okay, that's an exaggeration -- and whether a $120 million year is "hot" is debatable, considering some half-dead companies make more than that in a quarter. Still, customer wins with Tier 1 players were enough to increase market share for Vitesse Semiconductor Corp. (Nasdaq: VTSS) -- to 11 percent from 8 percent in 2003, according to figures released this week by The Linley Group -- even though the company has cut future network processor development.
"They've got a couple of Tier 1 design wins," says Bob Wheeler, a Linley analyst. "You figure those have a shelf life of maybe a couple of years, so Vitesse could keep bumping along at this level."
Other big communications chip businesses appear to have stabilized. IBM Corp.'s (NYSE: IBM) PowerNP line earned flat revenues -- albeit while losing market share -- even though IBM halted product development early in 2003. Hifn Inc. (Nasdaq: HIFN), which acquired the PowerNP, reports the parts did $2.1 million in the past quarter.
Wheeler says Hifn is even reviving the NP4GX, a next-generation chip IBM had canned. "It won't be out until 2005, but at least now that product line has a roadmap," he says.
Even a few OEM projects are coming back from the dead. "We're getting calls from people we had design wins with a year or two ago that we had written off," the Intel spokesman says.
Overall, network processors are blossoming after two years of winter frost. The market should grow to $120 million in 2004 from $85 million last year, Wheeler says.
In terms of revenues, Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) remains the king of network processors, with Intel Corp. (Nasdaq: INTC) in second place. Here's how they stacked up:
Table 1: Net Processor Market Share by Revenues
|2003 share||2002 share|
|Source: The Linley Group|
AMCC led in last year's market study from Linley as well, but the Intel spokesman says his company isn't sweating over the stats. Intel placed No. 1 in a similar survey by In-Stat/MDR, the difference being that AMCC's nP5700 traffic management chips are included in Linley's survey.
Among the disappointments, Motorola Inc. (NYSE: MOT) managed to ship a long awaited traffic manager, but its market share dropped. "Relative to AMCC and Intel, they just haven't delivered significant new products, and that's starting to catch up with them," Wheeler says (see Motorola Stuck on C-Port).
— Craig Matsumoto, Senior Editor, Light Reading