A true dark horse, Vitesse Semiconductor's ultrafast, sans-silicon chip has networking vendors waving money.
Last year, as chip giants like Intel and Motorola fell prey to the economy's ominous ups and downs, an unexpected leader emerged. The fastest-growing chipmaker in the US is a company you've never heard of: Vitesse Semiconductor.
Vitesse - French for "speed" - is true to its name. By using the more exotic gallium arsenide instead of everyday silicon, Vitesse's integrated circuits can operate at speeds of up to 10 GHz - 20 times faster than the fastest Pentium II.
Five years ago, Camarillo, California-based Vitesse found itself in a bad marriage. Its high-speed gallium arsenide processors drove Convex, Sun, and HP mainframes and supercomputers. (Because electrons travel faster through gallium arsenide than silicon, it was ideal - despite steep costs - for supercomputers that required extremely high speed.) But when the mainframe market shrank, so did Vitesse's profits. By 1993 its revenue had fallen to $26 million, a nearly 40 percent drop from 1992.
About the time Vitesse's profits bottomed out, the computer industry had a new problem: how to move large chunks of data quickly across a network. Says Lou Tomasetta, Vitesse's cofounder and CEO: "Within a few years everybody needed more bandwidth."
So Vitesse reengineered its gallium arsenide chips to power emerging technologies like ATM, gigabit Ethernet, and fiber optics. "We took the exact same processes, equipment, and interconnect methods that Intel uses for silicon and applied them to gallium arsenide," says Tomasetta.
Talk about serendipity. High-speed networking technology began to take hold in the mid-1990s, right as Vitesse was looking for new customers. Its brag sheet now includes Ericsson, Alcatel, Lucent, and Siemens.
In October 1998, Vitesse reported revenues in excess of $175 million, up 67 percent from 1997. That same month it doubled its production capacity with a new $100 million chip plant in Colorado Springs, which will enable Vitesse to expand into high-speed integrated circuits for network hubs, routers, and switches; Cisco and 3Com are among those who'll tap the growing supply.
Rivals are only just now popping up. IBM recently announced that it had devised a cheaper way to produce silicon germanium, which has properties similar to gallium arsenide but had been too costly to manufacture.
Vitesse's five-year jump on the market, however, means it's already spitting out low-cost chips. "We've known for a long time that gallium arsenide could increase processor speeds," says Tomasetta. "Now, people in silicon will kill for that extra 20 percent."
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