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Optical/IP

Startups Spout Bravado at NPC West

The network processor market remains lackluster, and players such as Silicon Access Networks Inc. continue to drop out (see Headcount: For the Masses). But some private companies seem to be getting established: Bay Microsystems Inc. and EZchip Technologies, in particular, are coming into this week's Network Processors Conference saying life is downright sunny.

Bay, for example, claims to be on the verge of the unthinkable: profitability.

"Almost all of next year is identified in terms of revenue," CEO Chuck Gershman says. "We're looking to profitability by mid 2004."

That's not to say recovery is imminent. Bay managed to succeed by finding refuge with the U.S. Department of Defense, where the startup's Montego network processor is finding work in 10-Gbit/s and IPv6 projects (see Bay's ATM Chip Heads Into Battle).

And Bay has taken its share of lumps as well, having postponed plans for its "Avalon" full-duplex OC48 chip due to lack of customer interest. "We've actually done the design, but we haven't put forward the work to tape that out yet," Gershman says.

EZchip is likewise talking big, as CEO Eli Fruchter says design wins snowballed in the last six months, with EZchip now carrying 25 customers.

Having received an investment from Nokia Venture Partners, the startup is announcing a design win with Nokia Corp. (NYSE: NOK) itself (see Nokia to Fund EZchip). Nokia will describe its plans, which involve IP processing for 3G wireless networks, at a Wednesday conference session.

It won't take a math wiz to see when the company reaches profitability -- if ever -- because EZchip's parent company, LanOptics Ltd. (Nasdaq: LNOP), is a publicly traded firm with no other source of revenues. For its quarter ended June 30, LanOptics reported losses of $819,000, or 10 cents per share, on revenues of $423,000.

EZchip has held steady at 85 employees for the past two years, and it's gotten its spending down to less than $10 million per year, Fruchter says.

Xelerated AB, another 10-Gbit/s processor startup, is using NPC West to debut the X11, a sequel to its X10 group of processors. The X11 is a 20-Gbit/s device, meaning it sports two lanes, each carrying 10-Gbit/s traffic (see Xelerated Unveils 20G Net Processor).

Also on the product front, Bay is debuting its Biscayne classifier chip this week. It sits in front of a network processor and looks up priority or routing information from large tables (the same idea as a "search engine" chip). Biscayne can work with any protocol but is particularly targeted at metro Ethernet, which Bay thinks will be the first zone for market recovery. "Taking Ethernet into the metro requires further enhancement above and beyond simply mapping it from an enterprise [protocol]," Gershman says (see NetScreen Firewall Gets Smart).

— Craig Matsumoto, Senior Editor, Light Reading

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