EZchip Dials Back the Speed
What's a technology lead in 10-Gbit/s network processors worth? Just a few million a year, apparently.
EZchip Technologies has spent a year touting its status as one of the few vendors to deliver a bidirectional 10-Gbit/s chip. But company officials recognize that the market for these parts is still weak.
To that end, EZchip yesterday announced two lower-end variants of its NP-2, a 10-Gbit/s network processor with an integrated traffic manager. The first is a slower version, running at 5 Gbit/s; the second keeps the 10-Gbit/s speed but ditches the traffic manager (see EZchip Intros Low-Cost Processors and EZchip Intros NP-2 Network Processors ).
"What we need to do is increase total available market," says Eli Fruchter, EZchip CEO. "The market for network processors for 10-Gbit/s today is still small. It's much bigger for 2.5 Gbit/s and 5 Gbit/s."
A look at EZchip's revenues -- reported through parent company LanOptics Ltd. (Nasdaq: LNOP) -- shows business is small but at least accelerating. For the second quarter ended June 30, LanOptics, which has no operations other than owning EZchip's stock, reported losses of $2.2 million, or 23 cents per share, on revenues of $1 million, compared with losses of $3 million, 36 cents per share, on revenues of $423,000 for the same quarter last year (see LanOptics Reduces Q2 Loss).
For the first quarter this year, LanOptics reported losses of $2.5 million, or 17 cents per share, on revenues of $614,000.
EZchip isn't the only company scaling back on speed. After releasing its nP7510 10-Gbit/s network processor, Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) came out with the nP3700 and nP3710, two 5-Gbit/s network processors with integrated traffic managers (see AMCC Intros Network Processors and AMCC Ships Latest Net Processor).
EZchip's half-speed parts actually bring the company down to the level of Intel Corp.'s (Nasdaq: INTC) IXP2800 and AMCC's nP7510, the distinction being that those devices provide 10-Gbit/s flow in one direction, while EZchip pursued a bidirectional part, giving it 20 Gbit/s total throughput.
It's for that reason that Intel doesn't see a need for its own 5-Gbit/s chip, says Doug Davis, vice president and general manager of Intel's infrastructure processor division "For a 5-Gbit/s type of application, they use a single 2800 now." (Intel has had a full duplex 10-Gbit/s part "on the roadmap for a long time" but details are still under wraps, Davis says.)
Intel claims it's seeing demand for the IXP2800 in metro and core applications, one example being a design win with Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7). (See Avici, Riverstone Pick Processors.)
Meanwhile, the part is also being picked up for slower-speed applications. "We see customers using [the IXP2800] in a lot of OC48 applications where you need to do a lot of deep packet inspection," Davis says. One example would be security, which notoriously hogs up processor cycles.
In 2000 and 2001, the 10-Gbit/s plateau was considered a major milestone for any network processor architecture. The heavy activity in that area has led to a bevy of devices on the market now, from companies including AMCC, Intel, Agere Systems Inc. (NYSE: AGR.A), Bay Microsystems Inc., Sandburst Corp., and Xelerated Inc. (See the Light Reading report, 10-Gig Network Processors.)
But the market for high-end network processors has been slow to develop, forcing startups and large companies alike to rethink their plans (see Fast-Chip Flees the Market, Cogni-Gone?, and Freescale Halts Net Processor Line). The good news is that the market is coming back, starting with lower-end devices targeting the access market. It's possible demand could be strong enough for Wintegra Inc. to float an IPO next year (see Chip Startups Process Profitability).
EZchip has amassed "forty customers, some very large and doing multiple products," Fruchter says. Eight of those are in production with EZchip's devices, and other six or seven should get to production by the end of the year, he says.
— Craig Matsumoto, Senior Editor, Light Reading
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