RED BANK, N.J. -- The consolidation in the frenetic network-processor market continues to unfold, with DSL-chip specialist GlobeSpan Inc. today acquiring T.sqware Inc. for $200 million in stock.
With the surprising acquisition, GlobeSpan gains a quick entry in thenetwork-processor arena. Santa Clara, Calif.-based T.sqware develops and sells programmable processors and termination devices for use in high-end switches, routers, and other LAN/WAN products.
"T.sqware's resources and capabilities will expand our product offerings to our customers and other DSL equipment manufacturers," said Armando Geday, president and chief executive of GlobeSpan, a Red Bank, N.J.-based supplier of chips for Digital Subscriber Line (DSL) applications.
The move also puts GlobeSpan in a booming but competitive market. Once dominated by an array of small, high-profile startups, the network-processor market is now inhabited by several large chip makers -- all of which have bought their way into the emerging business.
Recently, Conexant, Intel, Lucent, Motorola, PMC-Sierra, and Vitesse, have acquired various network-processor companies to gain a foothold in a business that is projected to grow from $1.9 billion in 1999 to $2.7 billion by 2003, according to International Data Corp. in Framingham, Mass.
Sean Lavey, an IDC analyst based in Mountain View, Calif., said that most of these large chip makers have the in-house expertise to develop complex network processors, but have opted to buy a specialist in order to reduce their time-to-market.
Others, like GlobeSpan, do not have the in-house expertise. The company may have acquired T.sqware in order to gain some expertise in developing host-processing chips for DSL modems, industry observers speculated.
Founded in 1997, T.sqware is one of the pioneers in the network-processor space. In 1998, the company rolled out its first product -- the TS704 Edge Processor -- a RISC-based chip designed to aggregate and terminate several LAN/WAN protocols in a system.
T.sqware, which has about 45 employees, will be folded into GlobeSpan.
The deal represents GlobeSpan's third acquisition this year. In January, the high-flying company acquired software-specialist Ficon Technology Inc. and PairGain Technologies Inc.'s microelectronics operation.