Silicon Spice

Continuing its torrid acquisition pace, Broadcom said today it will pay roughly $1.2 billion in stock for Silicon Spice, which makes chips enabling telecommunications gear to handle voice, video and data over a single network. Broadcom chief executive Henry Nicholas said Spice's architecture for communications processors, which enables banks of chips to be replaced with a single piece of silicon, is Broadcom's most strategic buy yet and opens a "multibillion-dollar" opportunity. "This is kind of the holy grail of carrier-class communication equipment," Nicholas said. "What Silicon Spice has created is a whole new computational element of the same significance of what the microprocessor was to the PC." The deal is Broadcom's largest ever. It is the seventh acquisition the company has announced this year and its 12th since last year. Silicon Spice is headed by Vinod Dham, who was one of the architects of Intel's Pentium chip. Later, Dham worked on the K6 for Advanced Micro Devices. Dham joined Silicon Spice in April 1998. Mountain View, Calif.-based Silicon Spice had an early investment from Cisco Systems, which is also one of its customers. Nicholas said Silicon Spice has working silicon but did not discuss specific products. Venture firm Kleiner Perkins Caufield & Byers is another Silicon Spice investor. Kleiner partner Vinod Khosla has been involved in some of the larger communications processor deals in the past year, including Cisco's $6.9 billion purchase of Cerent and the $4.3 billion acquisition of Siara by Redback Networks. Nicholas said many of today's systems that allow voice calls to be handled over packet-based networks require boars with up to 16 digital signal processors, while Silicon Spice's approach uses just one communications processor. This results in equipment that uses less power and takes up less space.