MILPITAS, Calif. -- In another sign that the wireline-chip business is still in trouble, Music Semiconductors Inc. here today announced that it has cut the prices for its content-addressable memory (CAM) devices by more than a staggering 30%.
Music claimed the price cuts will enable its CAM devices to reach new and emerging markets, but the surprising and unprecedented move could also ignite a price war in this niche-oriented chip industry, according to analysts.
The action could also accelerate the industry shakeout among CAM suppliers, many of which are reportedly struggling for survival during the current downturn in the communications chip market, analysts said
Among the hardest hit in the communications-chip downturn are the wireline-oriented IC makers (see June 28 story). Traditionally, CAMs are used in wireline-chip applications.
For years, in fact, suppliers of CAMs have geared their products for high-speed, table-lookup applications in routers and other networking gear. But generally, CAMs have been more expensive than traditional DRAM- and SRAM-oriented chips for table-lookup applications, thereby limiting the mass adoption for CAMs in the market.
Compounding the problem is that there are too many competitors in the CAM industry. Once an industry dominated by only two major competitors--Music and Japan's Kawasaki LSI--the CAM industry is now cluttered with a host of players, including Integrated Device Technology, NetLogic, Lara, and others.
But the lack of sockets in the CAM space is already causing a shakeout in the industry. Last month, for example, Cypress Semiconductor Inc. announced plans to acquire CAM-chip maker Lara Networks Inc. for $225 million.
The appearance of Cypress in the market, coupled by the downturn in communication ICs, is causing some vendors to take some drastic measures.
For example, Music is basically bombing the prices of its CAM devices by more than 30%. Effective immediately, OEMs can realize substantial discounts on high-volume purchases of any one of over 80 different networking chips in Music's product line.
"We expect our new pricing structure to increase the penetration of our packet-processing chips into a broader range of high-volume applications, such as wireless networks, set top boxes, network interface cards and hard disk storage arrays," said Ed Miller, president of Music in Milpitas.
The new prices depends upon the product line. For example, Music noted that it will offer substantial ''double-digit" discounts for its new Lancam B family of CAM parts.