The Linley Group

Conexant is going through a makeover with the aim of returning to profitability by focusing on its core businesses. The new CEO, Dan Artusi, has led the company to exit network processors, home networking, standalone 802.11 products, and packet switches. These decisions have helped the company shed 640 jobs, leaving around 2,500 employees. The company must start generating cash to service its $605 million in long-term debt.

The refocused Conexant now has three main businesses: broadband, PC modem, and set-top box (STB) components. The PC-modem business is the largest of the three and is basically a cash cow. Conexant's STB components include TV tuners, demodulators, MPEG processors, and DOCSIS cable-modem chips. In this area, the company faces stiff competition from Broadcom, STMicro, and Freescale. Broadband components consist of DSL and PON chips for both the central office (CO) and customer premises equipment (CPE). Although Conexant led all others in revenue for DSL products in 2006, the company has since fallen behind Broadcom and Infineon/TI.

Conexant's new strategy focuses on existing markets at the cost of new development. This is a short term and purely defensive strategy to maintain share and grow with the market. Unfortunately, major markets such as broadband and dial-up modems are flat on revenue. Thus, the company's strategy can, at best, maintain its revenue rate. At worst, the company's defense may succumb to attacks by Broadcom, resulting in revenue decline.

Conexant's current refocusing is similar to the strategy it used in divesting Mindspeed in 2003. At the time, the plan was for Mindspeed to focus on infrastructure products while Conexant focused on CPE products. Ironically, each company currently sells both CPE and infrastructure products, due to the synergies in serving both ends of the wire.

We believe this history will repeat itself. Conexant is likely to find that it needs the terminated products: the NPU to compete for CO sockets, and an Ethernet Switch and wireless controllers to compete for the CPE sockets against Broadcom. While Broadcom anticipates and invests in new technologies, Conexant retrenches to cut costs. Conexant's strategy could generate a short-term profit, but it is unlikely to bring long-term market success. —Jag

Last week, Akros announced a family of EMI and ESD suppression devices. The startup's AS1602 is the industry's first active component for this application. For the consumer market, the AS1602 enables Class B compliance with an additional 10dB of common-mode rejection. For ESD, it provides protection against 25kV of air discharge and 12kV of cable discharge--exceeding industry requirements. Akros is initially targeting Ethernet and PoE (power over Ethernet) applications for these devices. One chip is required for Fast Ethernet and two chips for Gigabit Ethernet.

Traditionally, OEMs use several passive components such chokes, capacitors, ferrite beads, and Zener diodes to provide EMI and ESD protection. Often, these passive components are added after a system fails to pass regulatory specifications set by the FCC and similar bodies. This rework can lead to production delays. The AS1602 enables system designers to proactively address EMI and ESD requirements. Compared with passive components, the AS1602 provides better ESD protection and greater margin for EMI suppression. System designers can check out the capabilities of the AS1602 in an Akros evaluation system that also includes a Broadcom GbE PHY. —Jag

News in Brief

Following on the heels of its Brooklyn-10 Ethernet switch, Lightstorm announced its Hudson OAM device this week. The two devices work together to enable carrier-grade Ethernet switching for telecom applications. Hudson supports OAM and CFM (connectivity fault management) conforming to IEEE and ITU standards. Hudson offloads connectivity check messages (CCM) from the Brooklyn-10 switch, monitoring these messages every 3.3ms. With such rapid monitoring, the system can recover quickly from faults on a connection. By matching the fault recovery of SONET/SDH loops, an Ethernet connection protected by the Hudson chip can be used for carrier-grade transport. —Jag

Coverage of Ethernet switches appears in our recent report A Guide to Ethernet Switch and PHY Chips.

Linley Tech Seminar: Carrier Ethernet Equipment Design

On January 30th, The Linley Group will host the first seminar in its Linley Tech 2008 series. This one-day event will focus on network processors, packet processors, transport processors, and control-plane processors for applications such as Ethernet aggregation, Ethernet access, and Ethernet-over-Sonet/SDH.

The seminar will open with a presentation from The Linley Group, highlighting Carrier Ethernet design trends and providing context for later presentations. The remainder of the program will include subjects ranging from packet processing to control-plane processing to 100G Ethernet designs. Relevant chips that will be discussed include network processors (NPUs), CPUs, and Sonet/SDH devices. Full details of the program will be announced shortly.

The seminar is intended for system designers, network-equipment vendors, OEMs, service providers, carriers, press, and the financial community. Leading chip vendors will discuss Carrier Ethernet applications and how their products can be used in new designs. Get the information you need to jumpstart your design! Attendance is free to qualified attendees; others pay $495.

This Linley Tech seminar will be held in San Jose at the DoubleTree Hotel. Mark your calendars and register now at our web site. Your free attendance is made possible by our event sponsors: Freescale, AMCC, EZchip, Wintegra, Netronome, Xelerated, and Lightstorm. Register early to guarantee your spot.