InfiniCon Annuls ASIC Activity

Just as Infiniband startup InfiniCon Systems Inc. was wrapping up a whopping $15 million funding round last month, the company was quietly abandoning its project to develop a proprietary application specific integrated circuit (ASIC) and laying off the handful of engineers that had been working on it (see InfiniCon Corrals $15M Round).

Chuck Foley, InfiniCons CEO, confirmed today that on Sept. 1, the company dropped a project to create its own ASIC for its InfiniBand-based gateways. The company had been aiming to complete the project -- which was already two years in development -- by 2005, he says.

At a time when most the remaining InfiniBand players are struggling to convince the world of their validity, the revelation that InfiniCon is aborting half-baked projects and is slashing headcount is perhaps an unfortunate one (see our report on Whither InfiniBand?).

“All of the Infiniband players’ revenues were creamed,” says Taneja Group analyst Arun Taneja. “Every InfiniBand vendor has had to take a really hard look at what they’re doing.”

Foley, however, insists that the decision to drop the ASIC program and to lay off approximately five engineers (he wouldn’t say exactly how many had been let go) doesn’t reflect a struggle to make ends meet, but is rather a sound business decision.“Like any small company, we have to try to balance our business according to what we think the market needs,” he says. “With advanced development projects, we have to constantly check if our initial assumptions are still valid. If they’re not valid, you ought to change directions.”

When InfiniCon delved into the ASIC project a couple years ago, Foley says, the company thought it would need the performance enhancements a proprietary ASIC could offer by as early as 2004. Today, however, the company’s technology is still showing two- to four-times better performance than its competitors, he claims, so an ASIC adrenalin shot isn’t necessary after all.

In addition, Foley says, InfiniCon hadn’t originally understood the potential of off-the-shelf network processors from companies like its partner Broadcom Corp. (Nasdaq: BRCM).

“We made the best decision we could two years ago,” he says. “But we really underestimated what the Broadcoms of the world could bring to the table... Now we see they offer a very powerful technology. They continue to impress us.”

On discovering that InfiniCon could achieve nearly the same performance levels as it was aiming for with its proprietary ASIC development with an industry network processor, the company decided that the project was a waste of money, Foley says, adding that the company has decided to hoard the money set aside for the program into expanding its sales and marketing staff instead. The company, which now has about 70 employees, will probably add four to five people to those areas by the end of the year, he says.Taneja says he thinks the company made the right choice. “If they were doing this just to get 10 percent better performance, why do it?” he says. “I think it’s a wise prioritization.”

— Eugénie Larson, Senior Editor, Byte and Switch