Optical components

Is Intel's GigE Chip on Hold?

A long-awaited Gigabit Ethernet part from Intel Corp. (Nasdaq: INTC) may have been cancelled, opening the possibility that the chip giant might acquire a startup in this field – and giving some breathing room to market leaders Broadcom Corp. (Nasdaq: BRCM) and Marvell Technology Group Ltd. (Nasdaq: MRVL).

According to at least one analyst, Intel has dropped plans for a physical-layer chip (PHY) for Gigabit Ethernet. "We believe that internal development of Gigabit Ethernet PHY technology has ceased at Intel. As a result, we do not think that Intel will be able to bring a product to market until the middle of 2003," writes analyst Jeremy Bunting of Thomas Weisel Partners in a note published just before the holidays.

Intel officials refused to respond, noting that they don't comment on unannounced products.

An Ethernet controller consists of two main parts: the PHY and the media access controller (MAC). Intel has its own MAC and has also developed its own PHY, with technology acquired from Level One Communications Inc. in 2000. That PHY turned out subpar, however, leading Intel to instead buy PHYs from Marvell. (Technically, Marvell receives the MAC from Intel, attaches its PHY, and sells the completed device back to Intel.)

Marvell has both the MAC and PHY parts, but the contract with Intel forbade Marvell from selling its own integrated controller. That provision was lifted in October when Marvell announced its Yukon device to compete with Intel's controller (see Intel/Marvell: Who Was Stood Up? and Marvell Announces Controller).

Further delays in Intel's PHY would help strengthen Marvell's position. Marvell not only gets to continue its Intel business but also has extra time to establish Yukon in the market.

"We believe that Marvell should continue to make headway with its own product over the coming quarters and garner numerous design wins," Bunting writes. "The real threat to Marvell is not Intel, in our view, but rather Broadcom." Broadcom makes its own MACs and PHYs, which it integrates into a family of controllers called NetXtreme. These parts, including the BCM5702 and BCM5703, began sampling in late 2001 (see Broadcom Intros Gigabit Ethernet Chips).

So what are Intel's options at this point? For one, the company could simply choose to continue using Marvell's (or anybody else's) PHYs. In fact, Marvell officials told analysts in October that the company is working on another part to be used by Intel.

Intel could also acquire a PHY maker, Bunting notes. Possibilities include startups Cicada Semiconductor Inc. and Massana, or the slightly older Mysticom Ltd. Given that analysts expect Intel, Broadcom, and Marvell to carve up this market among them, it wouldn't be surprising to see one of these startups accept a role under the wing of a larger company.

It should be noted that all this PHY-MAC action is separate from the market for Gigabit Ethernet switching chips. Here, too, Broadcom and Marvell lock horns, primarily with Broadcom's StrataSwitch and StrataXGS pitted against Marvell's GalNet and the upcoming Prestera products.

— Craig Matsumoto, Senior Editor, Light Reading

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