Broadcom is entering the PON chip market and has secured design wins with a major tier-1 equipment vendor. While this is something predicted here, the timetable was sooner than expected. This will have a substantial impact on FTTH component and equipment suppliers as well as the carrier currently conducting lab trials with the device.
The ongoing consolidation of DSL chip suppliers should create a positive structural effect on pricing and improve the overall health of the remaining players. Dave Burstein of DSL Prime fame points out that Broadcom (BRCM), Infineon (IFX), Conexant (CNXT), and Ikanos (IKAN) now account for 95% of DSL chipset market share. This is extremely positive.
Ikanos (IKAN) announced last week that it would pay a ‘leading European OEM’ $1.6M in return for a development agreement, most likely Alcatel. This is a very odd deal and is worthy of closer examination.
The latest Linley Group report on Networking Silicon Market Share provides a breakout of PON FTTH silicon market share for the second year running.. It includes both market size and market share information for all Networking markets, including PON. The key takeaway is that Linley believes the market grew only 20% in dollar size, though I estimate deployments grew worldwide over 50% year over year. Such is life as a semiconductor vendor.
They shared the following data with me.
The excellent Linley Group discusses Cortina’s recent acquisition of Immenstar, (my coverage here) a maker of FTTH silicon. Cortina is rapidly making itself as a consolidator communication silicon companies and Linley speculates their next target might be a ‘small VDSL vendor’. That vendor would be Centillium (CTLM), though I feel it is a better match for suitors other than Cortina.
Centillium Communications (NASDAQ CTLM) has a troubled past and present but the market has mispriced even the most pessimistic scenarios at this point, short of accounting fraud. With proper investor activism this value could be extracted through consolidation, liquidation, or private turnaround scenarios.
This is part IV in a continuing series. Part III can be found here.
Enter the Dragon
China Telecom (CHA) recently assembled a very quiet, closed door session of suppliers in order to orchestrate implementation of several extensions to the IEEE 803.3ah GE-PON standard. This event has gone totally unreported in the press. Obviously, knowing which companies attended would be valuable- this is what I have been able to conclude.
They were recently profiled in Lightreading and in the comments a short debate ensued on the merits of a quad OLT.