Why did IBM sell its CAM designs to IDT?
Silicon Strategies
09/04/2003, 2:25 PM ET
MOUNTAIN VIEW, Calif. -- What was behind Integrated Device Technology Inc.'s (IDT) move to acquire ternary content addressable memory (TCAM) designs from IBM Corp.?
The reason: IDT reportedly lost a major design win at its largest TCAM customer--Cisco Systems Inc.--to IBM's Microelectronics Division and this deal would allow IDT to continue to service Cisco, according to a report from The Linley Group, a research firm based in Mountain View.
On Tuesday (Sept. 2, 2003), IDT--the leader in the CAM market in terms of market share--agreed to acquire two types of TCAMs from IBM. IBM, which also makes switch fabrics for networking designs, has been developing both a 4.5-Mbit and 18-Mbit CAM to complement it networking IC offerings ( see Sept. 2 story ).
The deal is somewhat of a mystery, given that IDT is already a leader in CAMs. At the same time, IBM's Microelectronics Division has been developing TCAM-based designs, but did not disclose plans about these products.
"Because IDT is already in production with a 4.5-Mbit device and has been sampling an 18-Mbit device, this acquisition appears redundant," according to the report from The Linley Group. "We believe the acquisition is not technology driven, as IDT's current products are technically sound, with only minor issues that could be fixed in house."
There were other motives involved. "By far the largest consumer of search engines is Cisco," according to the report. "For each generation of systems, Cisco produces a custom TCAM specification and awards that design to multiple vendors," the report said.
"IDT and Cypress are currently shipping TCAM-based search engines to Cisco, but sources indicate that IDT had lost a next-generation TCAM win to IBM. Thus, the acquisition allows IDT to continue servicing Cisco's needs and maintain its market share. For IBM, the sale allows it to cash out a valuable design win while avoiding long-term support costs," according to the report.
There is some good news for IDT, however. "This acquisition strengthens IDT's position as the market leader. Cypress remains a strong number two, but startups and smaller TCAM players may elect to focus on other markets," the report said. |
