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Broadcom offers Rs.282 crore in cash for LVL7 acquisition

Posted: 04 Dec 2006     Print Version  Bookmark and Share

Keywords:Broadcom  LVL7 Systems  networking protocol  middleware protocol  Agere 

Broadcom Corp. has offered Rs.282.22 crore ($62 million) in cash for LVL7 Systems Inc., one of the few remaining independent developers of middleware for networking protocols. Given LVL7's existing integration deals with Agere, Infineon Technologies, Marvell Technology, Vitesse Semiconductor, Fulcrum Microsystems and Switchcore, the Broadcom move could prompt some scrambling in the communications IC sector.

Martin Lund, vice president and general manager of Broadcom's network switching business, said Broadcom's primary aim in acquiring LVL7 is to ease integration tasks for Broadcom's own customers. But Broadcom "will continue to deliver software components to all of LVL7's customers," he said. "We will offer stand-alone software elements and not just bundle them in with our silicon."

For LVL7, the dealmaker was Broadcom's dominance of the Ethernet switching space, said David King, vice president of marketing and strategy for the middleware developer. "Two years ago, LVL7 had a lot more silicon relationships," King said. "Since then, we've seen the strengthening of Broadcom solutions in the market and the weakening of competitive offerings. Given that, this seemed to make sense."

It would not be the first time developers of LAN and WAN chips have confronted acquisitions of protocol-stack specialists. Intel Corp. bought Trillium Inc., a Los Angeles developer of ATM and telephony stack software, and then sold Trillium to Continuous Computing Inc. Netplane Systems Inc., formerly Harris & Jeffries Inc., was snapped up by Conexant Systems Inc., which sold it to Motorola Computer Group.

Among software vendors focused on Internet Protocol, IP Infusion (San Jose, Calif.) maintains some independence as a supplier, though it was acquired by Japan-based Access Co. Ltd. in February. NextHop Technologies Inc., a developer of routing software competing with Cisco protocols, has diversified into wireless-LAN-routing and quality-of-service protocols in recent months, expanding its competitive overlap with LVL7.

King said his company has competed on many fronts with IP Infusion and NextHop, but "the biggest competition came from internal software development at OEMs and ODMs." LVL7 expects the impact of the Broadcom deal on other silicon suppliers to be minimal, he said.

But some Ethernet developers expect fallout at both the IC and OEM level. "Some of the Layer 2 switching software has gotten fairly commoditized, but LVL7 still has unique value-add areas. Broadcom has acquired some companies in the past to shut out competitors, and you have to wonder here how much of the offer was to bring the software in-house and how much was to foil the semiconductor competition," said a designer of Ethernet switching boards who asked not to be identified.

While LVL7's Fastpath suite of protocols was developed for a wide range of network topologies and interfaces, the company had seen the bulk of its business shift to Ethernet switching, where Broadcom dominates at 100Mbit, 1Gbit and 10Gbit speeds. Broadcom will focus the software integration on OEM products for small and midsized businesses. The LVL7 software has been integrated with MontaVista and Wind River operating systems.

- Loring Wirbel
EE Times




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