Rambus Buys Velio's Serial Biz

Startup will continue building its own chips, but its I/O technology will be in Rambus's hands

December 12, 2003

2 Min Read
Rambus Buys Velio's Serial Biz

Rambus Inc. (Nasdaq: RMBS) has offered to acquire the serial-interface technology of startup Velio Communications Inc., the companies announced this morning.

The deal is expected to close by the end of the year. Rambus officials say the purchase price is less than $13 million but aren't disclosing specific terms (see Rambus Acquires Velio Signaling Assets).

Velio was said to be on the block after the departure of founding CEO Raju Chekuri. In the fall, sources pegged Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) as the likely buyer (see Chekuri Checks Out at Velio and Velio Dealio Realio?).

The Rambus deal would be a less drastic move, as Velio is selling a piece of its technology rather than a product line or the whole company. Velio would license the technology back from Rambus and would continue to use it in its own chips, says Kevin Donnelly, vice president of Rambus's logic interface division.

The deal would let Velio trim some overhead, cutting 15 employees split between California and North Carolina. Rambus has made job offers to all 15, Donnelly says. It's unclear how many employees remain at Velio, as management hasn't disclosed headcount numbers for some time.

Serial interfaces are used in a variety of chips, including Velio's TDM switch and upcoming storage switch fabric. Rambus's specific interest is in system backplanes. The company's RaSer line of chips targets that spot, but it's meant for backplane upgrades, where OEMs want to squeeze faster signals across old copper traces.

By contrast, Velio concentrated on low power and high integration, the goal being to pile more interfaces onto a card or backplane (see Velio Cleans Up and Velio Breaks Grooming Barrier). "If someone's building a new system from scratch, the technology from Velio would be more appropriate," Donnelly says.

Rambus may also have been enticed by the extra revenues from the interface. Velio had begun licensing the technology and just signed a "serious contract with a major semiconductor company," Velio CEO Mike Ofstedahl tells Light Reading.Some companies might be skittish to give up such a key technology, because they don't want to rely on someone else for their next-generation development. But Ofstedahl says Velio wasn't counting on major upgrades to the interfaces any time soon. "Our plan for the next couple of years at least was heavily weighted on the I/Os [Rambus] will now be supporting."

Velio retains some key patents related to cramming more than 100 serializer/deserializers (SerDes) onto a chip. That kind of integration will be the company's calling card from now on, Ofstedahl says.— Craig Matsumoto, Senior Editor, Light Reading

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