SAN JOSE, Calif. The network processor sector shifts to small and medium-sized providers Monday (Nov. 12) with the announcement Intel Corp. is licensing the high-end of its IXP chips to startup Netronome Systems Inc. The move is being viewed as a good step for all the players in a business that hasn't lived up to early expectations.
Under the deal, Netronome will be responsible for finding and supporting new IXP customers as well as designing next-generation devices. Intel will continue to make the chips through 2012 and support existing customers.
Financial terms of the deal were not disclosed. However, Netronome will pay a licensing fee to Intel for existing products it sells as well as royalties for future products it designs compatible with the IXP 2800.
Intel has been the leader in network processors with a 24 percent share of a market pegged at about $236 million in 2006 and growing at about 20 percent this year, according to Linley Gwennap, principal of market watcher The Linley Group (Mountain View, Calif.). Applied Micro Circuits Corp. and Agere Systems, now part of LSI Corp., the second and third largest net processor makers are de-emphasizing the high-end of their network processor businesses, he added.
"It's an interesting dynamic. Now Netronome is joining companies such as Bay Microsystems, EZChip and Wintegra who see a $200-300 million market as pretty interesting," said Gwennap.
For Intel the move is one of the last shoes to fall in a broad reorganization stretching over the last 18 months. The world's largest chip maker has been re-focusing on its core PC processor business and exiting networking and embedded businesses it entered in the dotcom boom.
"When Intel got in to NPUs, they thought it was going to be a billion dollar market, but it won't hit a billion anytime soon," said Gwennap.
Intel emphasized it isn't selling off its IXP business as it did its comms board business to Radisys earlier this year. It plans to use technology from the IXP line in a family of system-on-chip devices, starting with the Tolapai chip shipping in 2008.
The move should be a win/win for Intel, Netronome and IXP customers, added Gwennap. Netronome's main challenge will be to expand into chip design.
The startup has been in the market less than a year with its first products, PCI Express networking cards and systems using the IXP. Now it will roll out two chip upgrades of the IXP 2800 over the course of the next year or so, one using Intel's next-generation processor link, the Quick Path Interconnect (QPI).
The company which has less than 80 people is ramping up a silicon design team made up at least in part of some of the Intel IXP engineers. As part of the deal, the startup expects to grow to about 125 people by mid-2008 and take on new design centers in Boxborough, Mass.; Santa Clara, Calif.; Shenzhen and Penang.
Netronome's first chip, already in design, will be a low-cost version of the IXP 2800 that uses DDR-2 and -3 memory rather than more expensive QDR parts used today. All future parts will use more than 16 micro-engines, aiming at high end users, as part of the deal with Intel.
A second part in design will use QPI, the new 6.4 Mbyte/second CPU interconnect coming with Intel's Nehalem CPUs in the second half of 2008. QPI will give the chips "a new way to achieve cache coherency to reduce latency and process millions of packets simultaneously," said Jarrod Siket, general manager of sales and marketing at Netronome.
Netronome is closing a venture financing round as a part of the deal. Details of the funding round were not available. The startup will continue to make PCI Express cards and systems using the current and future IXP chips.
As part of the deal Doug Davis, vice president and general manager of Intel's embedded group, will join the Netronome board.
Intel claims it has more than 200 IXP customers worldwide. They include giants such as Cisco, Juniper and HuaWei.