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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: Doughboy who wrote (963)	3/4/1999 11:58:00 AM
From: wdmak	Read Replies (3) \| Respond to of 6531

Found this on Investor's Business Daily. Could this be it? " 3Com Corp., one of the largest makers of computer networking gear, wants to be more like a chipmaker. The company doesn't actually want to make any chips. But it does want to design more chips for its own products. Today, 3Com designs only a small portion of its own chips. Most of its others are designed -and made - by Lucent Technologies Inc. and Broadcom Corp. Under its new chip strategy, which it calls ''siliconization,'' 3Com will continue to buy some chips from Lucent and Broadcom. But 3Com will design more of its chips, farming out the manufacture to chip foundries. Toward that goal, the company last month bought the assets of ICS Networking Inc. from that company's Valley Forge, Pa.-based parent, Integrated Circuit Systems Inc. 3Com paid $16 million in cash. ICS Networking makes chips for networks. ICS Networking's 28 employees will report directly to Craig Martin, 3Com's vice president of Worldwide Materials and Semiconductor Technologies. The second prong of 3Com's strategy is to develop and buy the various elements of a chip. ''This nucleus of people in Pennsylvania will basically be our core capability,'' said Doug Spring, 3Com's senior vice president of Client Access Business. ''We're trying to create more (chip) independence, to create our own IP (intellectual property).'' Spring says other large companies could follow 3Com's example and design more of their own chips. If this becomes a trend, some chipmakers could suffer. ''My guess is this idea will be looked at by many companies,'' Spring said. ''It could signal a paradigm shift in this area.'' But Spring doesn't expect every company to start doing their own chip design. ''It takes a large investment,'' he said. ''Only big companies can do it.'' 3Com says that designing more of its own chips will help it compete against Intel Corp. in network interface cards. 3Com and Intel are waging a bitter battle for this market. NICs are small circuit boards that go onto a computer motherboard to connect PCs to a network. Using more of its own chip designs, 3Com says it can get new NICs to market sooner and at a lower cost. 3Com leads with about 52% of the NIC market, says researcher Cahners In-Stat Group. No. 2 Intel has about 27%. But 3Com says it has no plans to start selling chips or chip designs on the open market. It wants to design more chips for its own products. Technology advances are making it easier for companies to do more of their own chip design. Foremost among these advances is the move to system-on-a-chip design. Chipmakers have traditionally created libraries of intellectual property. They reuse this IP when making chips for other companies. 3Com says it will develop its own IP library. It says it can use this to cut development time and production costs of many products. It's a sound strategy, says Emmy Johnson, an analyst with Cahners In-Stat Group. ''This works well for them as far as getting prices down. Other companies, such as Allied Telesys , have been doing that as well,'' she said. //////////////////////////////////////////////////////////// Copyright (c) 1999 Investors Business Daily, All rights reserved. Investor's Business Daily - Computers & Technology (03/02/99) 3Com Gears Up To Fight Intel By James DeTar 3/3/99 9:39 PM