Dec. 17, 2019

LightCounting comments on Cisco’s Silicon One announcement and Broadcom’s reaction to it.

Cisco’s unveiled a new strategy for Internet of the Future in a flawlessly orchestrated event for the industry analysts held in San Francisco last week. Optics made it to the shortlist of critical elements of the new strategy: Software, Silicon and Optics, but the real news at the event was all the latest ASIC chip Q100, shown in the photo below, and the 8000 series products that it enables.

Cisco Silicon One

Q100 is the outcome of Cisco’s acquisition of Leaba Semiconductor– an Israeli start-up specializing in ASIC design. Cisco paid $320 million for the company in early 2016, and it was a fantastic deal, considering what this team has accomplished. The new chip can be programmed to run as a switch, a router, or a fabric router ASIC, outperforming the competition in bandwidth and power consumption by a wide margin. The power consumption is improved by a factor of 15x, compared to current designs of fabric routers. 15x is not a typo -- the power consumption is 15 times lower, but is Cisco comparing apples to oranges? A 6-ASIC Clos network replaced by a single chip would certainly lead to a 3-5x improvement in power consumption. It is very likely that the new chip design adds another 3-5x improvement.

If Q100 is running as a switch, it also consumes less power than the competition, but saving are more modest – just 20%. Considering that mega datacenters (the largest market for high-speed Ethernet switches) consumed 4% of electricity in the US last year, reducing the power consumption of switches by 20% is a big deal. Just ahead of Cisco’s event, Broadcom released Tomahawk 4 (T4) ASIC, which offers 75% power savings. In this case, it is clear that Broadcom compares a 6-ASIC Clos network made of Tomahawks 3 (T3) chips with a single T4 chip.

Cisco plans to offer Q100 as a chip to customers like AT&T, that design core router white boxes. This new strategy was spelled out loud and clear by Chuck Robbins in the event opening speech. Cisco is embracing the new reality of open source software, white boxes, disaggregated systems, or whatever it is called; Cisco is open for business.

Chris Rice, SVP, Network Cloud and Infrastructure at AT&T, was interviewed at Cisco’s event. He admitted that AT&T is in the hardware business now. He also mentioned that the hardware business is not for everyone, confirming LightCounting’s findings from interviews with many service providers around the world. Details of this project will be released by LightCounting in a report titled “Cloud Strategies of Service Providers”to be released in January 2020.

Hock Tan, CEO of Broadcom commented on Cisco’s announcement during the latest earnings call: ‘The fact that Cisco is joining it [the trend for disaggregated solutions] we now feel validates the model, the trend we have been pushing. And it’s great to see that we’re right yet again. So we welcome the competition.”

There are two sides to this story. On the one hand, Cisco is a new and very powerful competitor to Broadcom in the merchant Silicon market. However, Cisco’s new strategy will accelerate transition to disaggregated solutions, unbundling software from hardware and hardware from Silicon and Optics. This will contribute to growth in the merchant Silicon market, liberating Broadcom from dependence on equipment suppliers (like Cisco) and opening a direct sales channel to the end users, including Cloud companies and Service Providers.

The bottom line: the total available market for Broadcom will growth faster, but Cisco will join the competition. It offers a larger reward for Broadcom, as long as they stay ahead of the competition. Cisco will have to work hard to penetrating the Cloud segment of merchant Silicon market. Broadcom has certainly taken an early lead.

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