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Intel takes a stab at programmable chips

The chip giant makes a move into the networking processor market to design semiconductors that are programmable to more widely address the market's needs.

Chip giant Intel today made a new move to address the market for programmable processors used in high-end switching and routing devices offered by giants Cisco Systems and Lucent Technologies.

Intel's entry into the networking processor market today follows last month's $2 billion acquisition of Level One Communications.

Intel already offers several chip components to third-party networking firms, but now the firm has set its sights on a market niche dominated by in-house development.

Company executives believe that networking firms, such as Cisco Systems, Nortel Networks, and Cabletron Systems, among others, may want to outsource development of more versatile programmable processors, rather than use more task-specific chips, sometimes called application-specific integrated circuits, or ASICs.

As switching and routing technology has evolved during the Internet age, driven by the use of Internet protocol, or IP, companies have customized switches to gain certain cost and performance advantages. For example, a company might build an ASIC chip specifically to forward IP traffic.

Yet the explosion of the Net has sped up the evolution of products and their introduction to the market, Intel executives say, necessitating more versatile "programmable" chips to address a wider variety of software and networking needs.

"The time is right to define what that solution will look like," said Doug Carrigan, a product marketing engineer with Intel.

Executives said specific products would likely roll out later this year.

Intel's rivals in this niche will likely be large internal networking chip development units in the key networking companies, as well as companies like MMC Networks and Broadcom.

Carrigan said Intel's programmable chip strategy would be a "significant portion of its silicon strategy" going forward. The chip giant is looking to expand its processor reach, targeting higher-margin networking components for growth as prices for basic PC chips continue to drop as pricing pressures continue.

In addition to its programmable chip plan, Intel will also likely build a set of software development tools so third parties can build specific technology support.

Intel's stock was up nearly 2 percent in early afternoon trading.