Silicon Access Nabs Huawei
Silicon Access officials aren't releasing many details, but Huawei apparently was intrigued by the company's chips, which include a network processor, address processor, classifier, and accounting device, all geared for 10-Gbit/s port speeds (see Silicon Access Launches Billing Chip, Silicon Access Offers Co-processor, Silicon Access Unveils Classifier, Silicon Access Tries 20-Gig, and Silicon Access Goes With the iFlow).
Huawei will use some combination of these chips in a core switch or router still under development. The Chinese giant then plans to work down the ladder, applying Silicon Access's parts to increasingly lower-end switches and routers.
Silicon Access CEO Perry Constantine wouldn't specify which of its chips are going into that first Huawei core box. It's probably not all four, however, given that OEMs are still willing to pick line-card chips from multiple vendors. Constantine would only hint that it's "fair to say" his company's iPP network processor is "at the center of this exercise."
Huawei is the first major customer Silicon Access has announced, and officials expect to name a few more customers during the next 90 days.
It's important for the company to name names, because investors and potential customers have grown skeptical about the survival prospects of net processor startups. In other words, Silicon Access obviously could use the revenue from Huawei, but the deal could be more valuable as evidence to investors that Silicon Access actually has a chance.
"The real issue is whether this gives them enough to raise whatever moneys they need," says Linley Gwennap, principal analyst of consultancy The Linley Group. "I hate to say this is enough for them to survive, but this is definitely a good sign."
Silicon Access already has its fans among venture capitalists. Gwennap figures they've raised more money than any other network processing startup, having picked up at least $124 million, including a fourth venture round that closed in March 2002 (see Silicon Access Raises $39M). Should additional funding become necessary, investors will doubtless get to look under the hood at the Huawei deal and decide whether it's enough to keep Silicon Access going, Gwennap says.
Still, he notes that a Huawei deal doesn't necessarily mean big bucks. Gwennap points to the Cisco effect: Nearly every network processor vendor claims to have a design win at Cisco Systems Inc. (Nasdaq: CSCO), but it's assumed that many of those are early-stage designs that won't necessarily reach revenue shipments.
In the past, Agere Systems (NYSE: AGR/A) has announced design wins with Huawei, at least one of which includes network processors (see Huawei Is Dear to Agere and Agere Announces China Deal).
At the least, Silicon Access think the Huawei deal provides some street cred among other OEMs. "It'll lower the blood pressure," says Hing Wong, vice president of business development at Silicon Access. "To be able to pass Huawei, it means you jumped through all the hoops."
CEO Constantine says Cisco's patent-infringement suit against Huawei shouldn't affect Silicon Access's contract, nor is he concerned that Huawei might have trouble selling products into the U.S. (see Cisco/Huawei Brawl Begins and Cisco Wins Round 1 Against Huawei). "We see Huawei as a major player in Asia, and we believe Asia in the telecom space has significant promise," he says.
— Craig Matsumoto, Senior Editor, Light Reading