Applied Micro Circuits Corp (AMCC) has purchased chip level software from IBM Corp to enable RAID controllers, SAN switches and HBAs based on IBM's PowerPC 400 series, for $227 million in cash.
The deal follows AMCC's acquisitions of JNI, for HBA components and 3Ware for SATA technology in the past 12 months and furthers its goal of becoming a key player in the storage market.
AMCC's Tom Tulliey, general manager and senior VP of worldwide sales says the acquisition will enable OEMs to develop more functionality on a single chip without driving the cost up, which should translate into more innovation and features for end users, for less money. He didn't say how much cost the company will wring out of these devices.
The control plane applications AMCC has acquired wrap around the core chip and enable storage devices like RAID controllers and SAN switches. HP and Brocade are already customers, which was a significant motivator for the deal, the company says.
"Revenue from this technology is small today, about $55 million," says Tulliey, "but there's tremendous interest in it." He says AMCC plans to "figure out standard products that nail a niche" so that OEMs don't have to develop their own chips. The company is planning to target different sub-markets, "it will scale from a big EMC RAID system to an HBA in a Windows white box," Tulliey says.
AMCC is expected to fork out an additional $5 million for the engineering team designing these applications. This group includes about 50-60 people based in France. AMCC must comply with various regulatory requirements around labor laws for this part of the deal to close within the next few months.
Analysts note that while AMCC continues to be acquisitive it still has a pretty limited storage portfolio and has a long way to go before it catches up with the likes of QLogic, LSI, Intel and PMCC in storage chip technology.
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