Broadcom Stocks Larder with Silicon Spice

Cable-modem chip supplier Broadcom Corp. said it agreed to buy privately held semiconductor company Silicon Spice Inc. for about $1.2 billion in stock, a deal that further expands Broadcom's voice-over-Internet Protocol (VoIP) technology portfolio.

Founded in 1997 by three Massachusetts Institute of Technology alumni, Silicon Spice develops software and development tools for high-density voice, fax and data-packet transport over wide-area networks.

Broadcom said Silicon Spice provides the core-processing engine for gateway and access devices that connect the public-switched telephone network (PSTN) to packet-based networks such as the Internet. Spice's products are targeted at communications-equipment manufacturers of carrier gateways, access gateways and remote-access concentrators.

Broadcom's position in the packet-voice market got a boost last year when it struck a deal to acquire Canadian firm HotHaus Technologies Inc. and its "HausWare xChange" software for about $280 million in stock. HotHaus's cable-modem software digitizes circuit-switched data traffic for voice, fax or data calls over IP, frame-relay and asynchronous-transfer-mode networks.

Broadcom plans to bundle Silicon Spice's processor platform with its xChange software to create "communications processors."

"We're going to take that processor and apply it with our heritage and installed base of voice and voice-gateway access concentrators," said Ross Mitchell, Broadcom's vice president of packet telephony.

In the cable sphere, those chips are expected to support the industry's PacketCable initiative, which, together with products based on DOCSIS 1.1 specifications, will pave the way for operators to migrate from circuit-switched voice service platforms to a less bandwidth-intensive VoIP solution.

"The mass deployment of that depends on the amount of real estate and the amount of power that the equipment at the MSO's headend takes to transition calls back to the PSTN," Mitchell said.

For example, if a customer is dialing from a DOCSIS 1.1 cable modem or wall-mounted gateway, and the person on the other end of the line is not using the cable infrastructure, they must go off band into the PSTN to complete the call, Mitchell added.

"That creates a huge voice aggregation problem, because the MSO has to be able to handle hundreds of thousands of calls."

Mitchell suggested that Cisco Systems Inc., an early Silicon Spice investor and client, Nortel Networks Inc., Lucent Technologies, Tellabs, Ericsson and Nokia represent potential buyers of Broadcom's new communications processors.