Sanmina Relights InfiniBand Fire

Is this contract manufacturer the missing link in the InfiniBand supply chain?

March 6, 2003

4 Min Read
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Amid the rollercoaster ride of largely negative InfiniBand news over the past year, contract manufacturer Sanmina-SCI Corp. (Nasdaq: SANM) has been steadfastly working behind the scenes on a turnkey InfiniBand offering (see Sanmina Readies InfiniBand Line).

Sanmina, a Fortune 500 corporation, is a key manufacturing supplier to IBM Corp. (NYSE: IBM), Dell Computer Corp. (Nasdaq: DELL), Sun Microsystems Inc. (Nasdaq: SUNW), and Hewlett-Packard Co. (NYSE: HPQ). In the InfiniBand space, Sanmina will own the intellectual property to the technology but rebrand it under the name of its OEM customers. The company is building everything from InfiniBand switches and host channel adapters (HCAs) to enclosures and cables.

"We call it InfiniBand-in-a-box," says Greg Thompson, program director for InfiniBand products at Sanmina. However, he was cagey about product details or roadmaps, as Sanmina's offerings are closely tied up with the plans of its server manufacturer customers, apparently. Thompson expects announcements from its OEM partners by this summer.

According to an industry insider familiar with the InfiniBand market, who requested anonymity, Sanmina is poised to be a major provider in the IB space. "It's a good bet that Sanmina's announcement foreshadows the true beginning of InfiniBand adoption among Tier 1 OEMs," he says.

How's that, then? When InfiniBand has been InfiniBroken for the past year?Here's the deal: Contract manufacturers -- think of these companies as the "manufacturer behind the manufacturer" -- rarely get into a market until all the technology pieces of the puzzle are available and standardized. Further, because contract manufacturing is a low-margin business, the opportunity for significant market growth is key.

In the case of InfiniBand, says Thompson, several forces had to be aligned for Sanmina to step into the market -- including the availability of second- or third-generation silicon, enabling software, and IB-enabled applications like Oracle Corp. (Nasdaq: ORCL) and IBM databases. "There's not a lot of point in jumping in and burning a load of money before then," he says.

Taking those one at a time: The market for InfiniBand silicon has shaken out, and out of the initial group of suppliers, Mellanox Technologies Ltd. and Agilent Technologies Inc. (NYSE: A) have emerged as the dominant players (see Banderacom Abandons InfiniBand, OmegaBand Is InfiniBusted, IBM Kills InfiniBand Chip, IBM Puts IB Chips up for Sale, Intel Bails on InfiniBand, RedSwitch, Agilent Ship InfiniBand Chip, Agilent Acquires RedSwitch, and Mellanox Pumps Up InfiniBand).

Next, the enabling software to manage InfiniBand connectivity is taken care of by Lane15 Software and, more recently, InfiniCon Systems Inc. For anyone wondering what happened to VIEO Inc.'s intellectual property around InfiniBand software, Sanmina appears to have it. "We are going to be the primary channel for [VIEO's] InfiniBand software," Thompson says (see InfiniCon Preps Software Unit, VIEO Goes Vanilla, and Lane 15 Picked for IB Test).

The last crucial piece of the puzzle -- applications that take advantage of InfiniBand -- appears to be on the table, too. Representatives from IBM's DB2 database group and Oracle's 9i clustering division say they have versions of their software that support the specification.Thompson insists all these components had to come together before the OEMs would take InfiniBand seriously. "They are very leery of committing to a new technology until the supply chain is well established," he says. On that note, he believes Sanmina's manufacturing model suits InfiniBand to a T. "The technology is standardized up and down the line, making it a commodity -- so there's no room for product differentiation."

In this scenario, because of the economies of scale realized by a single provider that cross-sells and acts like an "arms supplier" to the major companies, InfiniBand begins to look more appealing to server vendors, he adds.

But where does this leave the startups? Our InfiniBand industry insider thinks most of them will kick the bucket. "Now that the big boys are ready to buy, you can bet they won't bank on startups fighting to survive," he says. "They've expended most of their venture capital on product development, with very little financial wherewithal left to market and support their products." He believes the OEMs are more likely to choose the proven, worldwide technology manufacturer with which they have existing partnerships. We should probably mention that Sanmina recently completed a $3 billion contract for IBM's xSeries server manufacturing.

Could the surviving startups end up one step removed from the OEM, but remain in the game by supplying Sanmina? "We are continuously in discussions with the InfiniBand supply chain for intellectual property," says Thompson. [Ed. note: We'll take that as a yes, then.]

Sanmina, which has about 40 people in its InfiniBand group, clearly stands to benefit from the growing popularity among OEMs for low-cost manufacturing solutions. It will be interesting to see if other electronics manufacturing solutions (EMS) providers like Celestica Inc. (NYSE, Toronto: CLS), Flextronics Corp. (Nasdaq: FLEX), and Solectron Corp.

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