Applied Micro Circuits (AMCC) is taking a leap into Ethernet by acquiring Quake Technologies for US$69 million.
Quake designs chips for 10-Gigabit Ethernet equipment, an emerging engine of high-speed data centers and enterprise LAN backbones, as well as carrier lines. AMCC is a major vendor of chips for more traditional carrier equipment. It expects the all-cash purchase announced Thursday to open up opportunities in gear for both enterprise and service-provider networks, according to AMCC Chief Technology Officer Subhash Roy.
Although 10-Gigabit Ethernet has been shipping since 2001, it is still a tiny fraction of the Ethernet market because of its high price, according to Dell'Oro Group analyst Seamus Crehan. But he expects the market to grow rapidly from 500,000 ports this year to more than 9 million ports in 2010, even though it will be less than 5 percent of the total Ethernet market after it reaches that point. Current users include carriers, research institutions and very large enterprises, but other users are likely to start upgrading from Gigabit Ethernet starting in about two years, he said.
Quake sells components for both copper and optical fiber 10-Gigabit Ethernet interfaces, Roy said. Enterprises are using the technology mostly for server-to-server links and storage connectivity in data centers, he said.
Founded in 2000, Quake is a fabless semiconductor company with about 50 employees, the majority of them based in Ontario. Nasdaq-listed AMCC is based in California. The buyout needs regulatory approval and is expected to close at the end of this month. After the acquisition, Quake President and Chief Executive Officer (CEO) Daniel Trepanier will report directly to Kambiz Hooshmand, president and CEO of AMCC. Trepanier's title is yet to be determined. Most Quake employees are expected to join AMCC, which already has a facility in Ottawa, Roy said.