Intel's financial arm has made an investment in G.fast chipmaker Sckipio, raising the likelihood the semiconductor giant is preparing for a full takeover of the Israeli company.
Sckipio Technologies is widely seen to be ahead of the game when it comes to G.fast innovation, and an Intel Corp. (Nasdaq: INTC) acquisition would complement the chip giant's earlier takeover of Lantiq Semiconductor -- a Sckipio partner that also makes chips used in broadband networks -- and could even help Intel to sell more data center equipment.
The investment by Intel Capital covers all of Sckipio's Series C funding round, which prevents Sckipio from disclosing details of the amount. "It's an Intel policy," explains Michael Weissman, Sckipio's vice president of marketing.
Sckipio has previously raised a total of $27 million in its Series A and B funding rounds from a number of venture capital firms, including Amiti Ventures, Aviv Ventures, Genesis Partners, Gemini Israel Ventures and Pitango Venture Capital.
Light Reading has previously surmised that Intel has a hungry eye on Sckipio, and Weissman had some interesting comments to make when asked what Intel hoped to get out of today's investment and whether Sckipio was a takeover target for the company. (See Who Should Buy Sckipio? My Money's on Intel.)
"Number one, they believe they will make a lot of money on this deal, but I do believe there is an opportunity for additional collaboration," he told Light Reading. "We have a strong partnership with Lantiq, and its acquisition by Intel has increased Intel's interest in us because we have complementary technologies. I think in the long term we're going to enable Intel's core business in a way that is much bigger than us."
Indeed, Weissman reckons that as a result of growing investments in high-speed broadband technologies -- from the likes of Lantiq and Sckipio -- the "bottleneck" for consumers will migrate from the last mile to the data center. "The data center is not designed to handle the speed at which consumers are accessing systems," he says. "That creates an opportunity for Intel to sell a lot more data center gear."
Intel, then, could have a strong motivation for ensuring that Sckipio's technology can support the broadband ambitions of the world's biggest service providers, and Sckipio plans to use the Intel funding to make improvements to G.fast technology that UK fixed-line incumbent BT Group plc (NYSE: BT; London: BTA) has been demanding.
G.fast supercharges last-mile copper connections by extending the frequency range over which broadband signals travel, but it loses potency over longer distances and was originally intended for use at distribution points close to customer premises and served by fiber.
To make rollout economically viable, however, BT wants to deploy G.fast from street cabinets about 300 meters from customer premises, requiring bigger distribution point units (DPUs) with more ports.
During the recent Broadband World Forum in London, Trevor Linney, BT's head of access network research, told Light Reading he was looking to vendors to produce DPUs with as many as 96 ports, compared with the four, eight or 16 originally envisaged and designed. (See Long-Range, High-Speed Gfast Is Coming – BT.)
"We've shown 32 ports, twice what anyone else has been able to show, but we'll need to go to higher densities and some of the Intel capital will be used for that," says Weissman.
The funding will also help with standardization efforts aimed at extending the G.fast frequency range to 212MHz from a current limit of 106MHz. "That standard won't be ratified until the first half of next year," says Weissman. "It's not certain it will go all the way to 212MHz, but it will go beyond what it is today."
Weissman would not comment specifically on the timescale for the introduction of 96-port DPUs but did reveal that Sckipio is involved with BT's field trials of G.fast technology -- something the Israeli company has not previously disclosed -- through its partnership with network equipment vendor Adtran Inc. (Nasdaq: ADTN).
BT's trials and ambitions are fueling interest in G.fast among other service providers, according to Weissman, with the economics of the technology improving all the time.
Sckipio now reckons it is cheaper for an operator to roll out G.fast than to deploy vectored VDSL2. "That is substantive because operators considering G.fast have been asking if they should start with vectored VDSL2 to save money," says Weissman. "The reality is otherwise."
— Iain Morris, , News Editor, Light Reading