Broadcom Scales Big with Dune Acquisition

Broadcom, a provider of semiconductors for wired and wireless communications, is purchasing switch fabric solutions supplier Dune Networks. By obtaining Dune’s scalable interconnect fabric, Broadcom will significantly expand its product portfolio for data centers and large-scale cloud computing.

Broadcom intends to combine Dune’s distributed connection fabric with its existing suite of Ethernet solutions for data center networking equipment. Dune’s fabric switching solution should particularly assist Broadcom in meeting the emerging requirements for cloud computing networks at a large scale and addressing new market applications for Ethernet in the data center.

Data centers are scaling to provide significantly more bandwidth to meet the requirements of cloud computing, where computing resources, products and services, such as Software as a Service (SaaS), can be delivered real-time over the Internet. Dune’s scalable chipset supports bandwidth speeds of up to 100Gbps per port and can connect more than 10,000 ports in a single deployment, making it an ideal solution for supporting widescale cloud computing enterprises.

Since Broadcom manufactures chips, switching technology and related solutions that are used within networks and data centers, as well as smaller modems, processors and routers, this acquisition could have broad downmarket implications. Companies that manufacture solutions which enable delivery of voice, video, data and multimedia could greatly enhance those solutions’ capabilities using Dune-enhanced supporting Broadcom equipment. Broadcom has existing partnerships with major enterprise technology companies including Cisco, HP and IBM.

Any firm providing solutions for cloud computing and/or SaaS networks should pay close attention to how Broadcom integrates Dune’s fabric switching functionality into its chips in the coming year.

In connection with the acquisition, Broadcom expects to pay approximately $178 million, net of cash assumed from Dune Networks, to acquire all of the outstanding shares of capital stock and other rights of Dune Networks. The closing, which is expected to occur by the end of Broadcom's first quarter ending March 31, 2010, remains subject to customary closing conditions.