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BigBro
BigBro
12/5/2012 | 3:46:06 PM
re: Chipmakers Unfazed by Vendor Chip Shops

"We evaluated everything that's out there -- EZchip and all of them," says Suraj Shetty, director of marketing for Cisco's service provider group. "You either give up performance or you give up power -- or if you want both, you give up price. This is why we went back to the drawing board."


The way I read that statement, he's implying that they could have bought low-power, high-performance silicon off-the-shelf, but at a cost, so to drive down cost, they built their own... (Seem like a reasonable interpretation?)

If so, let's do the math:

If Cisco sells half a million of these chips (good luck!), then the R&D cost alone is $200 a piece. That's before the actual chip has been manufactured, which probably costs a couple hundred bucks for something this complex.

As a reality check, the 7200 series installed base was estimated at about 330k units less than a year ago, and that box has been selling multiple generations for a *long* time, so maybe they'll sell 100k copies of this chip before they go to version 2.0? That'd be $1k just in R&D per chip!!

Yikes, guys!

There's plenty of amazing merchant silicon out there, and system vendors building incredible products. This lets system vendors pick the best-of-breed, rather than having to bet on a single ASIC team, and hoping they get it right...
ruready
ruready
12/5/2012 | 3:46:06 PM
re: Chipmakers Unfazed by Vendor Chip Shops
Could not agree with you more. As long as a company has 70% GM they can afford to keep ASIC teams around and make that type of investment.

And then justify it by however they see fit.
rs50terra
rs50terra
12/5/2012 | 3:46:05 PM
re: Chipmakers Unfazed by Vendor Chip Shops
The truth is probably different. Cisco and Juniper are not willing to bet their farm - and their new generation products - on small companies like EZchip, Xelerated, Bay Microsystems.
Carriercop
Carriercop
12/5/2012 | 3:46:04 PM
re: Chipmakers Unfazed by Vendor Chip Shops
It's always about "control"...
Cisco and Juniper consider their market acceptance via organic development.
brahmos
brahmos
12/5/2012 | 3:46:02 PM
re: Chipmakers Unfazed by Vendor Chip Shops
why consider it in isolation ? the cost of the product initially and its lifecycle sw/hw upgrade fees will more than make up for any R&D costs upfront.


optobozo
optobozo
12/5/2012 | 3:46:02 PM
re: Chipmakers Unfazed by Vendor Chip Shops
Is it my imagination, or has the more concerted effort to develop one's own NP ASICs coincided with pressures of certain other vendor activity in "mirroring" a competitor's product? If you copy someone's internally developed ASICs, it's pretty much a slam dunk in court.


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