VTSS and AMCC had been positive in their conference calls. I was wondering if either of these actually competed with PMCS.
There are some overlaps among all three. PMCS seems the most exposed to ATM, AMCC to optical networking, and VTSS on all high bandwidth systems including SONET/SDH, ATM, IP, Fibre Channel, and Gigabit Ethernet.
From SEC documents:
AMCC overview:
We design, develop, manufacture and market high-performance, high- bandwidth silicon solutions for the world's optical networks. We utilize a combination of high-frequency analog, mixed-signal and digital design expertise
coupled with system-level knowledge and multiple silicon process technologies to offer integrated circuit, or IC, products that enable the transport of voice and data over fiber optic networks. Our products target the SONET/SDH, ATM, Gigabit Ethernet and Fibre Channel semiconductor markets. In addition, we recently introduced silicon ICs targeted for DWDM systems. We provide our customers with
complete silicon IC solutions ranging from physical media dependent devices such as laser drivers and physical layer products such as transceivers to overhead processor products such as framers and mappers. Our products span data rates from OC-3, or 155 megabits per second, to OC-192, or 10 gigabits per second. We also supply silicon ICs for the automated test equipment, or ATE, high-speed
computing and military markets.
Competition:
In the communications markets, we compete primarily against Conexant, Giga (acquired by Intel), Infineon, Lucent, Maxim, Philips, PMC-Sierra, TriQuint and Vitesse. Some of these companies have significantly greater financial and other resources than us, and some of these companies use other process technology such as gallium arsenide which may have certain advantages over technology we currently use. . . .
Top customers:
Sales to Nortel Networks, Inc., and its contract manufacturers, accounted for 20% and 27% of net revenues for the three and six months ended September 30, 2000, respectively, as compared to 36% and 33% for the three and
six months ended September 30, 1999, respectively. Sales to Insight Electronics, Inc., our domestic distributor, accounted for 18% of net revenues in both the three and six months ended September 30, 2000, compared to 15% for both the three and six months ended September 30, 1999. Sales outside of North America accounted for 15% and 17% of net revenues for the three and six months ended September 30, 2000, respectively, as compared to 21% and 23% for the three and six months ended September 30, 1999.
PMCS:
Overview:
The Company has two operating segments: networking and non-networking products. The networking segment consists of internetworking semiconductor devices and related technical service and support to equipment manufacturers for use in their communications and networking equipment. The non-networking segment includes custom user interface products. The Company is supporting the non-networking products for existing customers, but has decided not to develop any further products of this type.
Competitors:
Our competitors include Applied Micro Circuits Corporation, Broadcom, Conexant Systems, Cypress Semiconductor, Dallas Semiconductor, Galileo Technology, Globespan, Integrated Device Technology, IBM, Infineon, Intel, Lucent Technologies, Motorola, Texas Instruments, Transwitch and Vitesse Semiconductor.
Over the next few years, we expect additional competitors, some of which also may have greater financial and other resources, to enter the market with new products. In addition, we are aware of venture-backed companies that focus on specific portions of our broad range of products. ZCompetition is particularly
strong in the market for optical networking and optical telecommunication chips, in part due to the market's growth rate, which attracts larger competitors, and in part due to the number of smaller companies focused on this area. These companies, individually or collectively, could represent future competition for many design wins, and subsequent product sales. Larger competitors in our market have recently acquired or announced plans to acquire both publicly traded and privately held companies with advanced technologies. These acquisitions could
enhance the ability of larger competitors to obtain new business which PMC might have otherwise won.
Large exposure to ATM market:
A substantial portion of our business also relies on continued industry acceptance of asynchronous transfer mode, or ATM, products. ATM is a networking protocol. While ATM has been an industry standard for a number of years, the overall ATM market has not developed as rapidly as some observers had predicted it would. As a result, competing communications technologies, including gigabit
and fast ethernet and packet-over-SONET/SDH, may inhibit the future growth of ATM and our sales of ATM products.
VTSS:
Target market:
Vitesse targets emerging high-growth areas in the communications market such as SONET/SDH, ATM, IP, Fibre Channel, and Gigabit Ethernet, which require ICs that are capable of high-bandwidth data transmission. . . .
One of the key elements of the Company's strategy is to address, in addition to the physical layer, upper layers of high-performance communications systems such as the switching and processing layers. This provides customers
with complete chip solutions for major portions of their hardware. Further, it enables the Company to build defensible barriers against competitors who only
offer a partial or single circuit solution. . . .
The Company offers several products that address the needs of high-performance communications systems at the 622 Mb/s, 1.0 Gb/s, 1.25 Gb/s, 2.5 Gb/s and 10 Gb/s data rates for the SONET, ATM, IP, Fibre Channel and Gigabit Ethernet markets. These products support the increasing speed
requirements of transmission channels and the transmission of multiple channels on a single fiber. Today, most SONET systems utilize the 2.5 Gb/s (OC-48) standard, though use of the 10 Gb/s (OC-192) standard is growing very rapidly.
The Company developed its first 2.5 Gb/s ICs in 1987 and today has a wide range of 2.5 Gb/s ICs in the SONET market. Among the products offered in this area are multiplexers, demultiplexers, framers, switch cores, clock generation and
recovery circuits, forward error correction circuits, laser drivers optoelectronic receivers and amplifiers. These cost effective solutions for transmission, control and switching provide wide design margins, increased integration and overall lower system costs to the communications market.
Major customers:
Communications products accounted for 89% and 81% of the Company's total revenues for fiscal 2000 and 1999, respectively. In fiscal 2000, the Company's significant communications customers included Alcatel, Ciena, Cisco, Fujitsu, IBM, Lucent, NEC, Sun Microsystems and Tellabs.
Competition:
We compete directly or indirectly with the following
categories of companies:
. High-performance integrated circuit suppliers such as Hewlett Packard, Broadcom, Conexant, Intel, Motorola, Lucent Technologies, PMC Sierra and Applied Micro Circuits Corporation
. Internal integrated circuit manufacturing units of systems companies
such as Lucent Technologies, Fujitsu and Cisco Systems.
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