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To: Paul Engel who wrote (133840)	5/1/2001 6:24:40 AM
From: Amy J	Read Replies (2) \| Respond to of 186894

Paul, "IBM Unveils New Networking Chips, Wins Cisco Deal" By Nicole Volpe NEW YORK (Reuters) - International Business Machines Corp. (NYSE:IBM - news) on Monday unveiled new networking chips, including a processor that allows for less expensive customization by using software rather than design changes. Cisco Systems Inc. (NasdaqNM:CSCO - news), the top maker of computer-networking equipment, is developing the new IBM network processor for an advanced networking system, IBM said, declining to give further details about the system. The Cisco deal was the latest in IBM's efforts to win over top-tier networking customers amid market turmoil that has given a rough ride to many of its upstart and even established competitors in the communications sector. Indeed, Armonk, N.Y.-based IBM beat out Intel Corp. (NasdaqNM:INTC - news), the world's biggest chipmaker, on the project with Cisco, an industry source said. ``This was an excellent win on IBM's part,'' said Frank Dzubeck, analyst with Communications Network Architects. ``It establishes for them a stronger base within Cisco.'' Financial details of the deal were not disclosed, and Intel was not immediately available for comment. IBM's focus on advanced custom chips has allowed it to sidestep the worst of the downturn in demand for communications gear -- and the world's largest computer maker is currently investing $5 billion to build out its chipmaking capacity. ... Other companies in the communications chipmaker sector include Broadcom Corp. (NasdaqNM:BRCM - news), Applied Micro Circuits Corp. (NasdaqNM:AMCC - news) and Intel. Many of these companies have seen sales dry up amid an economic slowdown and a buildup in inventory. IBM and Intel are vying for the top position in supplying high end network processors, Dzubeck said, adding that market researchers predict the sales of the chips could go as high as $4 billion to $6 billion per year by 2004. ... IBM said sales of its networking chips, housed in its microelectronics group, tripled in the first quarter. dailynews.yahoo.com Paul, is IBM's $5B for total cap expansion of all chip types? Regards, Amy J