What is your strategy for the networking market?
Our networking business is mainly focused on enterprise connectivity, mostly around the LAN and SAN. Most of it is custom silicon in nature and this supports modular switches, larger director class switches and routers. Cisco, Huawei, and HP Procurve are some of our customers. Enterprises are going through another major upgrade cycle. Data traffic within an enterprise is growing and the amount of videos used in enterprises is also increasing due to training needs and other collaborations.

The other area of our networking focus has to do with the next build out that will happen in the service provider space. The last build out was the Internet to wireless. Before that, in the 60s and 70s, it was analog to digital. And, now, it is all the carriers focusing on replacing their declining voice-based revenues and delivering new services based on IP packets and high bandwidth which converge services based on data. Most of the telecom equipment vendors are our customers in this space.

We are involved in the premises level, especially on small and medium businesses. As these service providers deliver converged services, there is a need for a platform which brings services into the premises, as well as allow service providers to manage services and be able to differentiate those services based on customer requirement.

For example, Nortel is doing trials in twenty cities in the US with Verizon, based on a converged platform gateway called the Media Services Business Gateway. This is a box that has a lot of silicon and software and costs around $600-1000. This box will provide everything from voice, video, and data. So, in the core of the service provider network these services will have to be created. The other area of our networking focus is the continued growth of the access network, both wireless and wireline. I believe that we have a winning recipe. We have the custom silicon with the LSI expertise and we also have a high level of building block.

What are some of the new product lines you are looking at?
We introduced a completely new SAS technology, and we led and defined the SAS (Serial Attached SCSI) standard, replacing the 25 year old standard SCSI standard which LSI played an important role in inventing. Not only are we shipping the SAS component into servers but also the storage systems being shipped by companies like IBM. This is an entirely new product line from LSI. This is delivering enterprise class level external RAID capability in entry price points.

You have gone fabless, but you have fabs by virtue of the Agere acquisitions. What is your manufacturing strategy then?
We announced the deal to sell that capability in Thailand to STATS ChipPAC. We have an assembly and test operation in Singapore, which is going to wind down. We intend to move out of systems manufacturing capability and outsource the same to companies like Sanmina and Solectron. We now have a 51% financial stake in a fab and we dont employ any people.

What is the state of your operation in India and what kind of work is done out of here?
We have about 660 people and growing. Majority of who are for product engineering. They contribute in many ways across all our products from doing the complete chip design to working closely with some of our customers on the systems side. There is also a software development expertise here. Some of the teams do a complete chip design working with customers directly.

Sudesh Prasad
sudeshp@cybermedia.co.in

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