Intel continues its push into broadband
By Mark LaPedus
Electronic Buyers' News
(09/24/99, 01:26:23 PM EDT)
Continuing its assault on the communications-IC business, Intel Corp. is going after another booming segment of the market: broadband.
Earlier this week, Intel entered the emerging cable-modem chipset, satellite-IC, and related broadband markets by acquiring the Telecom Component Products (TCP) division of Stanford Telecommunications Inc. for an undisclosed price.And at nextweek's DSLcon trade show in Reston, Va., Intel and its newly formed Level One Communications Inc. subsidiary will make a renewed push into the business-oriented digital subscriber line (DSL) chip market.
With its latest moves in communications ICs, Intel is now positioned to become a powerhouse in the broadband-chip arena, according to Kim Funasaki, an analyst at International Data Corp. in Mountain View, Calif. In fact, Intel now has an offering in nearly all of the major broadband chip segments, such as cable, DSL, and wireless, Funasaki said.
Right now, however, no clear winner has surfaced among the competing broadband technologies. So Intel must hedge its bets and invest in many, if not all, of these technologies, according to Greg Lang, vice president and general manager of Intel's Network Interface Division. “We don't think one technology will win over another,” Lang added.
Intel will take a giant step into several emerging segments with the acquisition of the TCP division of Sunnyvale, Calif.-based Stanford Telecom.
With the acquisition-Intel's fifth major deal this year-the company will gain quick entry into the cable-modem chipset and other broadband-IC markets, pitting the chip giant against the likes of Broadcom Corp., Conexant Systems Inc., and Texas Instruments Inc.
Stanford Telecom's TCP division, also based in Sunnyvale, provides chip products for satellite, set-top-box, and broadband-wireless applications. The TCP division, which has 30 employees, will become Intel's Cable Business Unit. In June 1998, network-equipment provider Newbridge Networks Corp. announced plans to acquire Stanford Telecom, a supplier of broadband wireless systems and component-level products, in a deal worth $280 million. The lack of synergy between Newbridge's core businesses and Stanford's TCP business, however, left the TCP unit available for purchase. Intel stepped into the gap.
Newbridge will retain Stanford Telecom's equipment businesses, such as the Wireless Broadband Products and Satellite Personal Communications groups.
In the DSL market, meanwhile, Sacramento, Calif.-based Level One will make a renewed push into the so-called high-bit-rate DSL-2 (HDSL-2) chip market, a high-speed modem technology for business applications. HDSL-2-which is designed to replace traditional T1 and E1 lines in businesses-is a symmetric-based DSL technology capable of transporting data at 1.5 Mbits/s.
Level One has been selling an HDSL-2 chip for some time, but the product is geared toward fixed-rate 1.5-Mbit/s applications.
Sources said Level One this week will reportedly throw its support behind a multirate scheme for the HDSL-2 technology, sometimes known as symmetric DSL (SDSL). Also geared for businesses, SDSL enables data to be transported at speeds from 144 Kbits/s to 2.4 Mbits/s.
Other companies, including Conexant, GlobeSpan Inc., and MetaLink Ltd., also sell chips for SDSL applications.
Intel has been hot on the acquisition trail since the beginning of the year. In March, the Santa Clara, Calif., chip be- hemoth bought Level One Communications, a supplier of LAN/WAN chips, for $2.2 billion. Then in June, it purchased Dialogic Corp., a maker of computer-telephony integration products, for $780 million.
In July, Intel moved deeper into the market with the purchase of Softcom Microsystems Inc., a supplier of network processors, for $150 million. More recently, it acquired NetBoost Inc., a Mountain View-based supplier of products that enable the monitoring and control of multiservice network traffic in a corporate environment.
Intel is making these acquisitions at a time when its core PC market is slowing down, according to Funasaki. “At the same time, the communications-IC market is growing rapidly,” she said. “Intel is serious about communications IC.”
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