Intel unveils networking chips

BANGALORE, September 2: Intel entered the networking processor market

unveiling a new line of processors for telecommunications equipment and a

$200-million venture fund geared to attract allies to its cause. Intel

introduced its networking chips, including a network processor for gear

like switches and routers, to help make it cheaper and easier to build the

powerful equipment needed to speed data around the Internet.

Intel announced that it has entered into a definitive agreement to

acquire NetBoost in an all-cash transaction. California-based NetBoost

develops and markets hardware and software for communications equipment

suppliers and independent software sellers in the networking and

communications market. Sources said that Intel paid more than $50 million

for the company, bringing the amount that Intel has spent in acquisitions

in the past two years at close to $4 billion. The networking strategy will

largely center on the Intel Internet Exchange Architecture, or IXA, the

blueprint for a new family of networking chips.

Networking is shaping up to be the most significant venture in Intel's

strategy to expand beyond PC processors. With PC sales growth nearing a

plateau, the company in the past two years has been seeking out new

markets to maintain its historical financial returns.

Complementing the chip, Intel will release 12 other products that will

allow the IXA 1200 to be placed into a variety of systems. These range

from basic communications servers, to multiple processor systems, to

voice-data network solutions, or to serve as the engine behind virtual

private networks--a relatively deluxe service from communications carriers

that allows parties to engage in protected communications that are not

hooked up to the same internal network. NetBoost products will become

complements for the IXP1200.

In PCs, Intel has largely taken a core processor, most recently the

Pentium II and III family, and surrounded it with complementary products

to fit into as many segments as possible. As part of the strategy, Intel

has created a $200 million communications fund to investment in start-ups

and established companies that are interested in collaborating with Intel

on bringing the IXA architecture to prominence. The company will also

continue to buy networking companies as the telco equipment industry

begins to narrow the variety of building blocks it uses to create its

products.