RHK Reports Packet Silicon Revenues

LONDON -- Lightspeed Europe 2001 -- Even in an industry downturn, switching and routing silicon is seeing substantial growth, RHK Inc.'s Russell Johnson told delegates at the Lightspeed Europe conference this week.

Russell's definition of "switching and routing semiconductors" (SRS) includes all the chips on a line card after the framer. In other words, the chips that perform processing functions on packet-based traffic, including classification, forwarding, traffic management, security, and switching.

Up until a few years ago, most systems vendors developed their own silicon in-house. But now there is another option -- to take hardware off the shelf and refocus resources on adding value to a product through the software.

Over the last few months, Russell has polled all the public and some of the private companies making switches and routers, taking down estimates for revenue generated from SRS in 1999, 2000, and the first half of 2001.

First, the good news. RHK's study found that total revenues leapt from $77 million in 1999 to $175 million in 2000. "And despite the economic downturn it looks like 2001 is going to be even bigger than 2000," Russell predicts. In the first half of 2001, revenues already top $140 million, he found.

One reason that SRS continues to forge ahead is because it can steal market share away from an existing, captive market, he says. It doesn't have the uphill task of creating a completely new market.

The bad news? More work is needed to woo systems vendors and prove that merchant silicon will be a sound investment. "We need a platform technology," Tom Beese, CEO of 40-Gbit/s network processor vendor ClearSpeed Technology Ltd., told the meeting. "If systems vendors take the risk, and move their business model to differentiating through software, they need to know they are going to get a return on their investment, one that's going to last through several product generations."

In both 1999 and 2000, the biggest portion of revenues came from table lookup engines, such as CAMs (content addressable memory). That explains the prominence of some of the companies in the public company chart, such as Integrated Device Technology Inc. (IDT) (Nasdaq: IDTI), Kawasaki LSI, and Music Semiconductors Inc.

The other best seller is switch fabrics. The majority of Agere Systems' SRS revenues in 1999 and 2000 were due to its Atlanta ATM-switch fabric chipset, according to Russell. Introduced in 1997, sales of that chip are falling off now.

A surprise to some is how small a share belongs to the focused telecom chip companies like Mindspeed Technologies, Motorola Inc. (NYSE: MOT), and Vitesse Semiconductor Corp. (Nasdaq: VTSS). Instead, computer chip giants IBM Corp. (NYSE: IBM) and Intel Corp. (Nasdaq: INTC) are top dogs.

Another small point to note about the chart is that Applied Micro Circuits Corp. (AMCC)'s (Nasdaq: AMCC), and MMC Networks' revenues are listed separately. AMCC bought MMC networks in mid 2000 (see Semiconductor Merger Mania).

As far as private companies go, five were shipping product over the last two years: SiberCore Technologies, which makes a classification co-processor; Power X Networks Inc., and ZettaCom Inc., which are both shipping a switch fabric; and Solidum Systems Corp., which has a security co-processor. The fifth company, Entridia, has since gone out of business, having failed to close its next round of funding. Entridia had developed a network processor that's based on a reconfigurable, hardwired chip.

— Pauline Rigby, Senior Editor, Light Reading
sandiego 12/4/2012 | 7:28:19 PM
re: RHK Reports Packet Silicon Revenues Why aren't they included, isn't the $300m+ Abrizio M+A reporting any revs?
geof hollingsworth 12/4/2012 | 7:28:10 PM
re: RHK Reports Packet Silicon Revenues Abrizio was shut down earlier this year and the team disbanded.
ronhui 12/4/2012 | 7:28:02 PM
re: RHK Reports Packet Silicon Revenues Lara Tech CAM has a major market share. (Around 20 mil USD in revenues?) It is now accquired by Cypress. But I can see neither Cypress and Netlogic. Why?
(_x_) 12/4/2012 | 7:27:53 PM
re: RHK Reports Packet Silicon Revenues Does that mean that Mahi Networks is toast?
BlueWater66 12/4/2012 | 7:27:48 PM
re: RHK Reports Packet Silicon Revenues I'm sure that Velio should be on the private company list? Any idea why they aren't included? I am fairly certain their revenues are greater than several of the companies listed.
jmontara 12/4/2012 | 7:27:45 PM
re: RHK Reports Packet Silicon Revenues FYI,

Serveral on my list did not make it into the report. Here they are:

Silicon Providers of Traffic Management (Quality of Service) functionality:
Acorn, GenFlow-2X12c, OC-12 dual port traffic management co-processor.
Agere Systems, APC Lite(tm) and APC Ultra LiteGäó; APC Lite and APC Ultra Lite devices provide full traffic management capabilities, including address lookup and translation, policing, operations, administration and maintenance (OAM), spatial and logical multicast, dynamic and static buffering and full hierarchical scheduling of ATM traffic
Agere, GÇ£Payload PlusGÇ¥, Network Processor
AMCC (MMC Networks) nPX5700 traffic management chip.
Azanda Networks, for line cards running at OC-192 and higher.
Bay Microsystems, designer of network processors
Entridia, Forte, Forwarding Engine; wire-speed packet forwarding Net ASIC device operating at OC-48
Ezchip, QX-1 Traffic Manager, works with NP-1 network processor at OC-192 speeds.
Fast-Chip Inc, Packet classification at OC-192; Receives and buffers incoming Network Packets Classifies the packets according to user-defined rules stored in its on-chip Policy Database Tags packets for post processing by packet editor or traffic manager Collects statistics and can implement filters.
IBM, Network ProcessorsGǪ future plans in this segment
Infineon Technologies, ABM GÇô 3G; new chip acts as a "traffic controller" directing, prioritizing and controlling the flow of voice, video and digital data within telecommunications networks while ensuring Quality of Service (QoS).GÇ¥
Marvell, GalNet-3 switch processors; switched ethernet controlers with ATM connection support that operate at OC-12 rates.
Mindspeed, CX27470 Traffic Stream Processor (TSP)
Motorola, C-5, network processor
Power X Networks, Terrachannel Product Family, switch fabrics interpretable with Motorola processor.
PMC, PM2329 ClassiPI(TM)packet content classification processor
Vellio xxx
Vitesse, PaceMaker
Silicon Access,
Zuma Networks,
Zetacomm, ZEN-QM-200 is aimed to allow system vendors to assign packetized traffic to different buffers, enabling management and QOS (quality of service) function.
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