Rockwell Exits Fast Ethernet Chip Set Business
Electronic Buyers' News - 04/17/98; 3:30 p.m. ET
Following a slowdown in its core modem chip business, Rockwell
Semiconductor Systems (RSS) has quietly exited the Ethernet-based
chip set market and laid off the employees involved in the product
arena.
The Newport Beach, Calif.-based company has discontinued selling its
Fast Ethernet-based chip sets as well as a controller that integrated
56-kilobit-per-second modem and Fast Ethernet functions all on the
same device, as part of its move to eradicate its LAN chip set group
within its Network Access Division, confirmed a spokeswoman for the
semiconductor giant.
Even though the Fast Ethernet-based chip set business was not a big
part of RSS' total sales, dropping the line flies right in the face of
RSS' previously disclosed diversification strategy -- to be more than
just a modem company.
Since a large percentage of RSS' sales are derived from the modem chip
set business, it said it hoped to diversify by expanding into other
markets.
Still, the company said the action was taken to focus on its bread-and-
butter, stand-alone 56-Kbps modem chip sets, as well as other emerging
chip areas, the company said.
"The company has discontinued its LAN and LAN-plus-modem chip set
group as a separate entity within the Network Access Division, and is
instead redirecting LAN development efforts as component technologies
within its 56K, cable, and xDSL modem initiatives," according to an
RSS spokeswoman.
The company said it laid off a "small" number of employees involved in
the LAN part of the Network Access Division, but declined to elaborate
on the extent of the workforce reduction.
Analysts were somewhat surprised by the company's actions. "I think
it [combination Fast Ethernet/56-Kbps chip] would have been a good
chip to bring out to compete with the soft modems coming out for the
notebook PC market," said Ernie Raper, senior analyst with VisionQuest
2000, in Moorpark, Calif.
The action follows a sudden slowdown in RSS' core modem chip set
business. Last month, RSS' parent company, Rockwell International,
projected its sales would be 22 percent lower in its second fiscal
quarter of this year, compared with 1997. At the time, it also took a
$10 write-off on its semiconductor division.
At the same time, competition is heating up in the 56-Kbps modem chip
set market for RSS. Earlier this year, the two rival 56-Kbps modem
chipset camps agreed upon a single standard, dubbed V.90. RSS backed
the so-called k56flex modem standard, while 3Com was a proponent of
the x2 modem technology.
Still, there are many problems in the 56-Kbps modem market in spite of
a common standard. Recently, eight different notebook PC vendors had
their Personal Computer Memory Card International Association Card-based
modems rendered useless by 3Com's V.90 software download on the Internet.
3Com officials said they are fixing the glitch, but declined to
elaborate.
HOW SWEET IT IS!
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