San Francisco -- Hoping to change the perception of the company, Infineon Technologies AG here outlined its strategy to boost its already large presence--and image--in communications chips, especially in the networking sector.
As part of its broad and complex strategy, Infineon has reorganized its networking chip operations, beefed up its product lines, and developed a series of strategic alliances in this sector.
Among those alliances is an unannounced deal with Massana Inc., an intellectual-property (IP) core supplier, based in Palo Alto, Calif. Under the terms, Infineon and Massana are quietly co-developing a line of transceivers for the emerging copper-based, gigabit-per-second Ethernet standard.
The moves are intended to expand Infineon's efforts in the networking chip space-if not a means to change the perception of the company, said Mark Tyndall, vice president of business development for the Communications Business Group at Infineon, based in Munich, Germany.
"We are more than a DRAM company," Tyndall declared in an interview with SBN here on Friday, referring to the company's large, high-profile DRAM business, which seems to grab most of the attention in the media.
"We're also strong in communications," he said. "We feel we don't get a fair valuation in the market based on our presence in communications."
Like most high-tech companies, Infineon is frustrated by the beating it has taken in the U.S. stock market, partly due to its exposure in memories. On Friday, its share price dropped nearly one point to just over $38. Over the last year, its stock has traded as high as $88.
Still, analysts believe that the company has fueled its own perception in the market, especially by promoting its aggressive expansion in the DRAM business.
In fact, nearly 50% of its worldwide sales are derived from memory products. Its fiscal 2000 sales totaled $6.26 billion, up from $3.6 billion in the previous fiscal year. Infineon's memory-chip sales for fiscal 2000 doubled to $2.98 billion from the prior year.
Wireless-communication chip sales for the year totaled $1.05 billion, up from $744 million in fiscal 1999. Wireline-communication chip sales for the year increased to $809 million from $619 million in 1999. However, that unit's quarterly operating loss widened to $4.3 million from $2.5 million in the same period of 1999.
Hoping to boost its sales-while reversing the losses-the company has reorganized its Wireline Communications Group (WCG) into six divisions: Access 1; Access 2; WAN (wide-area networking); LAN (local-area networking); Hi-Speed Communications; and Fiber Optics.
Previously, the company also had six divisions in WCG: Hard Disk Drive; Optocouplers; Fiber Optics; Transceivers, Data Communications; and Hi-Speed Communications.
As part of the reorganization aimed to streamline the operation, the company shifted its Hard Disk Drive Division from WCG into the memory group, while it also announced plans t o divest the optocoupler operation in an effort to cut costs (see Nov. 16 story).
In addition, its former Transceiver Division, which sold Digital Subscriber Line (DSL) chips and other products, was split into two groups-Access 1 and 2. The Access 1 Division sells consumer-oriented DSL chips and transceivers, while the Access 2 group sells higher-end DSL ICs for the very-high-bit-rate DSL (VDSL) market.
Meanwhile, the former Data Communications Division, which developed WAN-oriented chips, was renamed the WAN Division.
At the same time, it formed the LAN Division, which consists of a recently-acquired company called Ardent Technologies Inc. In October, Infineon acquired Ardent, a supplier of switching ICs for Layer 2 applications for Ethernet-based networks (see Oct. 2 story).
Ardent developed a switching chip that supports 24 ports for Fast Ethernet and two port s in gigabit-per-second operations. "We are also developing a next-generation device [for Layer 3 to 5 applications]," Tyndall said.
To boost its switch-chip efforts, the company is also developing transceiver technology in conjunction with Massana. "We're licensing the digital technology from them," Tyndall said. "They are good at DSPs (digital signal processors). We have the analog expertise."
By next year, Infineon hopes to ship a family of multi-port transceiver designed for use in copper-based gigabit-per-second networks, he said. The move would enable Infineon to compete in the market against the likes of Broadcom, Marvell, and other suppliers, he added.
Perhaps Infineon's most important market is fiber optic chips, where it makes and sells ICs for use in ATM, SONET/SDH, and related networks. "We experienced a growth rate of 72% in fiber optics last year," he said. "We have 10-gigabit-per-second products. We have already sampled products for the 40-gigabit-per-second market."
The compa ny also sells line-card chips, E1/T1 ICs, ISDN products, and others. It has no plans to enter what is perhaps the hottest market in this arena-network processors--at least for now. "Network-processors are an abused term," he added.