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Applied Micro leads chip-speed war

The communications chipmaker claims front-runner status among its major rivals, saying it has started shipping the next wave of fast chips for telecom gear.

Communications chipmaker Applied Micro Circuits claimed front-runner status among its major rivals on Monday, saying it has started shipping the next wave of fast chips for telecom gear.

"(Applied Micro) has a lead here, and in some cases it's a big lead," said principle analyst Linley Gwennap of the Linley Group, who says he does not expect other major chipmakers such as Vitesse Semiconductor, Motorola, IBM, Intel and Agere Systems to reach this point until later this year or the beginning of 2003.

The chips, for telecom equipment makers like Cisco Systems and Nortel Networks, run at 10 gigabits per second (gbps), about four times faster than the current standard, and more than 178,000 times faster than a standard 56kbps dial-up modem.

Although Applied Micro has started sending samples of the finished product, the company still cannot produce them in vast quantities, so the race to market is not over. Some start-up chipmakers have also begun shipping finished samples.

But Applied Micro claims the upper hand. "There is not a customer out there that wants to order (the chips) in volume," said Jim Lucas, an Applied Micro spokesperson, who said he believes the company has enough time to reach mass production since the market has not begun to heat up.

Lucas added that the company offers a more complete line of chips that gear makers need to run alongside 10gbps processors, a product portfolio that he said start-ups cannot match.

Competitor IBM noted the low demand in the market, dampening any advantage Applied Micro might have.

"Ten gig is not what our customers are asking for so that's not where we're playing, but we are working with customers to deliver 10-gig capability in the 2004, 2005 time frame," said IBM spokesperson Michael Loughran.

Others say the competition will not hinge on the speed of a chip.

"The first generation of 10G processors are good at what's called being 'packet pushers,'" said Bob Gohn, a vice president of marketing for Motorola's C-Port network processing products, who believes the first chips will not be able to do much beyond routing data packets to their destination.

Gohn said Motorola plans to send finished samples to prospective customers in mid-2003, but said they will compensate for the later entry by making 10gbps chips that can perform more functions.