BANGALORE, INDIA (09/28/2000) - It takes more than good silicon these days for chip makers to sell their wares to network equipment makers. Chip vendors have to offer customers a full package of protocols, applications and even the reference design.
"Customers are looking for solutions as they have a big challenge of time-to-market," said Mark Christensen, Intel Corp.'s corporate vice president and general manager of its Network Communications Group. "More and more of our customers want more of the solution, and the company that can provide them with the most complete solution, rather than a bunch of chips, is the one that will win."
Intel isn't the only company making the shift from pure chip design and manufacture to building systems-level expertise and providing what OEMs (original equipment manufacturer) demand.
"Chip companies are being asked to provide more complete solutions by their OEM customers - Taiwan Inc. and China Inc.," said Will Strauss, president of Forward Concepts, a Tempe, Arizona-based market research firm focused on DSPs (digital signal processors) and new technology markets such as broadband data communications. "OEMs want complete reference designs that they can wrap plastic around, and sell the product with their own label."
Texas Instruments Inc. (TI), which makes DSPs and analog circuits, for instance, is also building systems-level expertise.
"In the last few years, we have focused a lot on gaining systems knowledge and systems expertise both in-house and through acquisitions," said Mike Hames, TI's vice president and worldwide manager of its DSP business. "We have gone from more of a component player in the 1980s into a platform player to now provide a lot of system-level solutions in a lot of key markets."
Besides customers' need for solutions around the chips to help them cut down time-to-market, the higher level of integration on chips is also a factor driving chip vendors to acquire system-level expertise.
"We are able to integrate so many things that used to be board level products, into a single chip," Hames said. "So you can't define these products if you don't take knowledge of the entire system, integrate the right memory, the right logic, peripherals and analog functions to solve the customer's problems. So it is really a function of where technology has driven us, and the pace that these markets are moving at."
Implementing functionality in software further helps to speed time-to-market and upgrade a design quickly.
"It also allows our customers to differentiate their products," Hames said. "It is very important whether you buy a digital still camera or a communications device, that customers can differentiate their product from their competitor's product by having an open software platform, where maybe they take 70 (percent) or 80 percent of the software that we develop to get a product quicker to market, but then they can add 20 (percent) to 30 percent to give the product unique capabilities in the market."
Many chip makers, including TI and Intel, have developed open platforms with published APIs (application program interfaces) to which third-party developers can create algorithms that plug easily into the platform.
TI's acquisitions have helped the company build systems expertise in communications markets such as DSL (Digital Subscriber Line), packetized voice and cable modems. Earlier this month, TI completed the acquisition of Alantro Communications Inc., based in Santa Rosa, California, for its wireless local area networking technology, and of San Diego-based Dot Wireless Inc., which offers 3G (third-generation) CDMA (Code Division Multiple Access) wireless technology.
TI also has developed systems technology in-house, such as chipsets for GSM (Global System for Mobile Communications) phones, faster image processing for speeding up laser printers, and chipsets and software for digital still cameras and MP3 multi-standard Internet audio players, Hames said.
Intel's Network Communications Group is positioned as a supplier of building blocks to makers of networking and communications equipment. The company offers a range of silicon to these markets, from embedded versions of Intel's mainline Pentium and Celeron processors, to the IXP1200 programmable network processors that do packet-level processing of the data on the network.
"We have over 60 design wins today going into production," Christensen said. "We have 100 in the pipeline going behind that, and those are people who actually bought development systems and are playing with the technology."
The need to offer solutions to customers is a key factor behind many of Intel's acquisitions.
"We are making major investments in solution stacks in different market places," Christensen said. The company, for instance, announced in early August that it is acquiring Los Angeles-based Trillium Digital Systems Inc., a developer of protocol stacks for Signaling System 7 circuit switches, ATM (asynchronous transfer mode), voice-over-IP (Internet Protocol), multi-protocol routing systems and wireless base stations.
"Trillium will be porting their solutions for those applications on top of the Intel architectures, on top of IXP," said Christensen. "So we are investing in the whole solution around our processing architecture, and not just the hardware."
While other chip companies, like Irvine, California-based Broadcom Corp. moving into optical communications, for instance, Intel is has a different focus.
"Don't forget that Intel is already a major supplier of PC boards -- millions of them -- supplying virtually all of Gateway's boards and half of Micron's PC boards, as well as many others. Gateway and Micron simply become box assemblers around such boards. So Intel has already moved up the food chain. Evidence is that they are moving even further up the chain to supply the entire 'box' in the VoIP gateway through Dialogic," said analyst Strauss, referring to the Intel acquisition of Dialogic, which makes telecommunications and computer telephony components.
Intel's Network Communications Group, in Hillsboro, Oregon, can be reached at +1-503-264-7558 or http://www.intel.com/. Texas Instruments, in Dallas, can be reached at +1-972-995-2011 or http://www.ti.com/. Forward Concepts, in Tempe, can be reached at +1-480-968-3759 or http://www.forwardconcepts.com/.