Cypress Semiconductor Corp. said the wider customer access it expects to gain through today's Universal Serial Bus (USB) licensing deal with Intel Corp. will pull in an additional $20 million in revenue next year.
By tapping into the development know-how and the user base Intel is building on the PC side through its USB-enabled host controllers, Cypress expects to hang on to its lead in the USB peripheral controller sector-estimated by In-Stat Inc., Scottsdale, Ariz., at about 50% of the market.
In May, Cypress added high-end USB technology to what was predominantly a low-end portfolio through the acquisition of Anchor Chips Inc., San Diego, for $15 million. While the Intel license will bring a USB hub controller and other new technology, it's Intel's clout that Cypress is after, according to company officials.
"Anchor Chips had what we believed was the ultimate solution on the high end, but they didn't have a deep enough sales and marketing force," said J. Daniel McCranie, senior vice president of sales and marketing for Cypress, San Jose. "What we want out of the Intel arrangement is to get hard engagement with [a larger] account base."
In return, Cypress will help Intel with demand creation by ensuring peripheral devices such as printers, modems, and digital cameras, are compatible with Intel-based systems.
In an interview, McCranie, said that while terms of the 10-year licensing agreement were not disclosed, Cypress expects the business it generates "will be accretive to the organization immediately."
Riding the growing wave of USB ports populating desktop and notebook computers, the company racked up $8 million in USB controller sales in 1998 and expects to make $35 million this year, according to McCranie. As the market hits its stride, however, Cypress estimates its sales will rocket to $120 million in 2000-with the Intel deal accounting for about 17% of that business.
"This will clearly make us the No. 1 supplier of USB peripheral chips," McCranie said.
Under the deal, Cypress gains access to Intel's 8x930 and 8x931 USB peripheral controllers and development tools and will receive an early look at Intel's USB 2.0 host controller design, which should enable it to bring a next-generation peripheral controller to market in the third quarter of 2000, according to Pete Fowler, vice president of marketing for Cypress' interface products division.
The USB 2.0 standard, recently defined at the Intel Developer Forum, is expected to enable PC-to-peripheral connection rates of 360 to 480 Mbits/s-30 to 40 times faster than the existing specification.
The Intel 8x930 and 8x931 families include a number of different single-chip USB controllers for highly integrated PC peripheral applications requiring fast speeds and applications that demand USB hub connections or that need low-power and noise, or high-level language support.