Networking and datacenter fabless chip company Cavium Inc. (San Jose, Calif.) is buying a 2011 startup Xpliant Inc. for $90 million and to gain Ethernet switch silicon.
Fabless chip company Xpliant is described as a provider of high-performance, high-density switch silicon targeting applications in the data center, cloud, service provider and enterprise markets. Xpliant has yet to produce significant revenue but was believed to be working on silicon for a data center switch which Cavium presumably feels is a product offering it would like to roll out.
Cavium is already an investor in Xpliant having provided $15 million of funding through June 2014 and which is included in the cost estimate. The remaining $75 million is comprised of approximately $40 million in cash and $35 million in stock, Cavium said.
Xpliant is reported to have raised about $19 million in equity capital. With that money Xpliant has developed a family of switching silicon chips for 10G/40G/100G systems and with port speeds ranging form the multi-hundred gigabit to the multi-terabit, Cavium said.
Bringing the Xpliant products together with Cavium's existing infrastructure product offerings including ThunderX ARM-based server processors, MIPS-based Octeon networking processors and LiquidIO server adapters makes sense Cavium said. Note ThunderX and Xpliant chips are not yet available in volume and are thought to be a 2015 offering.
The volume of global mobile data traffic is expected to increase by a factor of 11 over the period 2013 to 2018, equivalent to a compound annual growth rate (CAGR) of 61 percent, Cavium said referencing Cisco's Visual Networking Index and Global Cloud Index. Data center IP traffic will more than double between 2014 and 2017 and show a CAGR of 30 percent, Cavium attributed to the same source.
This will drive the adoption of software-defined networks and Ethernet switch silicon for which annual market is in excess of $1 billion Cavium said.
"The Xpliant line of products is highly synergistic with Cavium’s existing infrastructure products and will enable Cavium to deliver highly optimized end to end solutions to our customers," said Syed Ali, Cavium CEO, in a statement.
Cavium made a net loss of $11.0 million on sales revenue of $90.7 million in the second quarter of 2014. The revenue was an 8.9 percent sequential increase from the $83.2 million reported in the first quarter of 2014 and a 22.2 percent year-over-year increase from the $74.2 million reported in the second quarter of 2013. Total cash and cash equivalents were $140.6 million at June 30, 2014.
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