Over the past two years, Broadcom, Intel, PMC-Sierra and other big chip makers have snapped up dozens of smaller companies. The pace has slowed recently, and we can now begin to evaluate how well those acquisitions are doing.

Some companies clearly got their money's worth, while others ended up with little or nothing. In the worst cases, the larger vendors have nearly killed the startups they acquired.

Broadcom has the best track record. Consider the company's acquisition of BlueSteel Networks in March 2000. Within a year, Broadcom had announced four security processors using BlueSteel's encryption technology.

This acquisition, valued at $150 million at the time, gave Broadcom entry into the rapidly growing security-processor market. Even today, Broadcom is the only major networking-silicon vendor with its own high-speed encryption chip.

AMCC's $4.5 billion acquisition of MMC Networks has also gone well. Since the August 2000 announcement, the former MMC has rolled out new products without missing a beat, including an OC-48 network processor, 10-Gbit/second traffic manager and 160-Gbit/s switch fabric. With a single acquisition, AMCC has smoothly transitioned from PHY vendor to full-service networking-silicon company.

Intel is also attempting to become a full-service supplier through acquisitions, but it has found this strategy difficult. Purchases such as Level One and Softcom were supposed to deliver products to support Intel's popular IXP network processors. But the acquired employees have struggled with Intel's corporate dictums, and many have left. The acquisitions have borne some fruit but no particularly successful products.

Motorola has faced similar challenges in its February 2000 acquisition of NPU startup C-Port. Despite allowing C-Port some operational autonomy, Motorola has watched key employees leave. In the end, C-Port's NPU shipped a year later than the startup had planned.

Intel and Motorola have long histories of developing products in-house, which can make acquisitions difficult to assimilate. Since the C-Port acquisition, Motorola has chosen to partner with rather than purchase related chip vendors. Intel, however, has continued its acquisition binge and is quickly learning that writing a big check is the easiest part of the deal.

Founder and Principal Analyst of the Linley Group, Linley Gwennap is the Coauthor of "A Guide to Network Processors" (WWW.LINLEYGROUP.COM/NPU).