K & thread: IBM is trying to muscle onto telcom chip stage:
biz.yahoo.com
IBM unveils network chips, sets goal to be No. 1
By Eric Auchard
NEW YORK , Sept 1 (Reuters) - International Business Machines Corp. (NYSE:IBM -
news) on Thursday will unveil a new family of network processor chips and related strategies
as part of a bid to become the world's top supplier of communications microelectronics by
2003, IBM officials said.
IBM, the world's largest computer maker, is looking to boost its role as a supplier of
technology parts in hot demand by computer, communications and consumer electronic
makers, reaching beyond its roots as a supplier of entire computers.
The Armonk, N.Y.-based company will introduce Thursday a new family of programmable
communications chips for data networking products like routers, hubs and switches that can be enhanced using software rather
than costly hardware upgrades.
``We feel we will be in the No. 1 or No. 2 position by 2002 and no. 1 by 2003 in wired communications,' Christine King, vice
president for wired communications at IBM's Microelectronics division, said in an interview.
IBM seeks to be the dominant player in high-growth wired communications markets industry analysts estimate will generate
$20 billion in revenues by 2003. That figure excludes wireless communications markets, where IBM is also keen to play.
IBM faces a host of rivals, the most formidable of which, Intel Corp. (Nasdaq:INTC - news), the world's largest chipmaker,
has set out its own plans this week to extend its dominance of PC chip markets into a leading role in communications chip
markets.
IBM's latest moves come on the heels of a pact announced Tuesday with Cisco Systems Inc. (Nasdaq:CSCO - news) to sell
off some aging network equipment lines to Cisco, a key customer, in exchange for a 5-year deal to supply Cisco with network
components worth an estimated $2 billion and a range of consulting services.
The Cisco-IBM deal cleared the way for IBM to make a graceful exit from slow-growing parts of its aging network business,
thereby allowing it to quit competing against customers of its faster-growing component supply business.
The diversified computer maker is now a bit player in the communications electronics market with less than a 5 percent share,
but the business is fragmented, with a mix of established players and a host of hot young start-up firms.
Rivals include communications chip makers such as Level One, recently scooped up by Intel, as well as Broadcom Corp.
(Nasdaq:BRCM - news), PMC-Sierra Inc. (Nasdaq:PMCS - news) and MMC Networks Inc. (Nasdaq:MMCN - news).
Other players include communications equipment maker Lucent Technologies Inc. (NYSE:LU - news) and Texas Instruments
Inc. (NYSE:TXN - news), a supplier of voice-to-data conversion chips.
IBM's Technology Group -- already a top industry supplier of components like custom computer chips and storage drives -- is
expanding its focus on supplying electronics to fast-growing markets for Internet-based data and voice communications.
In a break with chip industry practice, the officials said IBM is joining C-Port, developer of the industry's first general-purpose
network processing chip, to encourage open standards for software designed to run on this emerging class of communications
chips. Most chip companies currently prefer to keep such software secrets to themselves.
IBM also plans a Communications Research and Development Center, bringing together IBM's formidable research from
facilities around the globe with chip developers and network system designers to forge new communications technologies,
including switches with massively expandable capacity.
IBM believes its heavy investments in materials and manufacturing research will put them in the forefront of future generations of
semiconductors, overcoming traditional advantages rival Intel has had in advanced manufacturing.
Key IBM technologies such as complementary metal-oxide semiconductor, silicon germanium, and copper interconnect offer
greater processing power, low power consumption and system-on-a-chip integration -- promise to eliminate many current
limitations on Internet performance, analysts said.
IBM's years of creating custom chips for customers -- it is the world's No. 2 supplier of application-specific chips -- will lend
itself to tailoring custom products based on the new chips, King said.
The centerpiece of the new product family is the IBM Network Processor, a high-speed chip that can transfer gigabits, or
billions of bits of network traffic a second.
A key component is the IBM 28.4 gigabit Packet Routing Switch -- a so-called ``switch fabric' that makes different types of
network equipment able to talk to each other and is far faster than parts from rival chip makers.
Kevin Reardon, director of strategy for IBM's Technology group said customers for the new line include Canada's Nortel
Networks Corp. (Toronto:NT.TO - news) and Newbridge Networks Corp. (Toronto:NNC.TO - news) and France's Alcatel
Alsthom , all data networking gear makers.
In a related move, Reardon said C-Port and IBM are also exploring ways to make their individual network processor
technologies work closely together, allowing equipment manufacturers to incorporate them into their products.
He said C-Port has chosen IBM to build its general-purpose network processor, known as the C-5, and intends to work with
IBM as its key technology provider to enhance future generations of the processor -- allowing it to benefit from IBM's
anticipated advances in chip process manufacturing.
C-Port is a well-financed start-up in North Andover, Mass. founded by the former head of Digital Equipment Corp.'s network
hardware division. It is viewed by analysts as having an early lead among a new generation of network chip companies.
Regards, M2 |
