Intel agrees to buy networking chip company Fulcrum

Intel is acquiring networking chip company Fulcrum Microsystems for an undisclosed amount in an effort to boost its networking offerings, Intel said Tuesday.

Fulcrum, which is based in Calabasas, California, was founded in 1999 and designs Ethernet switches that are used in data centers. Fulcrum's 10 Gigabit Ethernet and 40 Gigabit Ethernet switch products will complement Intel's processors and Ethernet controller offerings, the company said.

Intel has a dominant share of the server market, but the company is trying to gain bigger control over movement of information between servers in data centers. Fulcrum offers high- performance and low-latency products that will bring faster network speeds to cloud implementations, Intel said.

Intel acquired a string of networking companies in the late 1990s with the aim to provide chips to network providers, said Nathan Brookwood, principal analyst at Insight 64. Among those acquisitions was Level One, which Intel bought in 1999 for $2.2 billion, but those deals went nowhere, Brookwood said.

The Fulcrum acquisition is a bit different from the 1990s splurge, Brookwood said. Intel offers variations of its Xeon server chips that are used in storage systems in data centers and Fulcrum's acquisition could help Intel offer high-performance switches that complement the Xeon chips.

"This seems like it's a bit of a better fit," Brookwood said.

But Intel may face a challenge as many competitors such as Cisco and Hewlett-Packard, through its 3Com acquisition, offer unified servers for data centers with storage and networking components, Brookwood said. The success of the Fulcrum deal lies in how well Intel adapts Fulcrum products into its offerings, he said.

The agreement is subject to customary shareholder and regulatory approval, and is expected to close in the third quarter of 2011.

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