Broadcom Ups Its Stake in the Enterprise

Arthur Cole

It was a long time coming, but it seems that the changes taking place in the enterprise are starting to shake things up in the communications processor market.


Broadcom announced today that it is dropping a cool $3.7 billion on NetLogic Microsystems, a chip developer specializing in enterprise-class networking and wireless devices. The deal is seen as a sign that Broadcom wants to expand its range of products to meet demands from top clients like Cisco and Apple for both the speed and power to run increasingly large and complex data environments.


Indeed, as Broadcom CEO Scott MacGregor told Wall Street this morning, the company is aiming for nothing less than the top spot in all wired and wireless communications processor segments. The goal with NetLogic is to add network routing and cellular prowess to Broadcom's already strong position in switches. Rather than build up that knowledge from scratch over a number of years, Netlogic provides an instant wedge, even if the $50-per-share price represents nearly a 60 percent gain over last week's closing price.


Still, Netlogic's technology is impressive. The company recently released a 28 nm, 80-core version of its XLP device capable of 100 Gbps at 2.5 GHz. The device offers hardware support for virtualization and can be used in up to 8-chip multiprocessor configurations for applications ranging from Long Term Evolution (LTE) basestations to enterprise networking and storage.


Naturally, news of a big deal on Wall Street kicks the speculation mill into high gear regarding other possible combinations. Word has it that Broadcom had also taken a close look at Cavium Networks but found the NetLogic deal more appealing. Trading on both Cavium and Israel's EZchip Semiconductor were up this morning in the hopes that someone like Marvel or Texas Instruments might want to make a counter move.


Communication has always been king at the enterprise, but it's only recently that technologies like virtualization and the cloud have shifted the burden away from server and storage technology onto networking. The advent of infinitely scalable resources means there will always be something available to process and store data, but shuttling it across increasingly complex LAN and WAN environments is shaping up to be the next major challenge.



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