SAN JOSE -- Cisco Systems Inc.'s recent move to acquire wireless-chip maker Radiata Inc. could put Cisco's chip relationship with Intersil Corp. in limbo, according to industry observers and analysts.
But officials at Cisco here this week insisted it would still maintain its chip ties to Intersil in the wireless local-area networking (WLAN) market--at least for its current generation of products.
The uncertain future between Cisco and Intersil surfaced earlier this week, when Cisco announced plans to acquire Radiata for $295 million (see story). Radiata, based in Syndey, Australia, supplies chip sets for WLANs.
Cisco currently holds an 11% stake in three-year-old Radiata, which is developing new chip sets for the the emerging IEEE802.11a standard in 5-GHz wireless networks. Radiata's chip sets that enable wireless data in offices to be networked at up to 54 megabits per second.
Radiata's 5-GHz products will be integrated in Cisco's family of Aironet WLAN products, including access points, adapters, and bridges.
San Jose-based Cisco is currently shipping the Aironet 340 Series line of products based on the IEEE 802.11b wireless standard, which operates in the unlicensed 2.4-GHz frequency range at speeds up to 11-megabits-per-second.
Cisco uses chip sets from Intersil in the Aironet 340 line. Cisco will continue to use Intersil's chips in that line despite the acquisition of Radiata, according to a spokesman for Cisco. "Intersil is a still strong partner for us," the spokesman for Cisco said. "Cisco will continue to use Intersil's chips for its Airnet 340 products."
In fact, the future propects for the Aironet 340 line looks even brighter, especially when systems based on the new IEEE 802.11a standard enters the market sometime in 2001, the Cisco spokesman said.
Prices for systems based on the slower IEEE 802.11b will fall dramatically as a result of the IEEE 802.11a standard, he said. "We will continue to sell the Aironet 340 for a long time," he added.
But the spokesman indicated that Cisco's would use Radiata's chip sets in a future line of products based on the IEEE 802.11a standard. Cisco will migrate towards these chips in spite of Intersil's announcement this week that it would also develop chip sets for the higher-speed standard.
Officials from Intersil could not be reached for comment, but the prospects look bright for the Irvine, Calif.-based company. The company's Prism line of WLAN chip sets are being used by a growing number of OEMs, including 3Com, Cisco, Symbol, and others.
At the same time, the WLAN market is booming. The total expenditures for WLAN products will jump from $1 billion in 2001 to $4 billion by 2004, according to Cahners In-Stat Group of Scottsdale, Ariz.
Other market researchers argee that the wireless LAN segment is surging. "My impression is that the WLAN market has gained a lot of momentum over the last six months," said Greg Collins, an analyst with the Dell'Oro Group Inc. in Redwood City, Calif.
But the competition is getting tough in the WLAN chip market. In the 2.4-GHz market, Atmel, Intel, Intersil, Texas Instruments, RF Micro Devices, and a few other sell various types of chips WLAN applications.
In the emerging 5-GHz sector, Atheros Communications Inc., Innocomm Wireless Inc., and Radiata are among the few vendors that have publicaly announced chips for this market.
But not surprisingly, the 5-GHz standard remains in question. On one side, for example, there's is the IEEE 802.11a standard. Then, the Europeans are pushing a slightly different version called HiperLAN 2. Still others are pushing proprietary versions of the technology.