QLogic will spend some of its cash hoard to move into the InfiniBand (IB) market.
The Fibre Channel HBAsvendor and switch maker will pay $109 million for IB startup PathScale and assume the firm’s outstanding unvested stock options.
PathScale is developing System Area Network fabric interconnects for high-performance clustered system environments. The company has a number of OEM design wins for its InfiniPath InfiniBand Host Channel Adapter (HCA) and OpenIB software that will begin generating revenue late this year, QLogic CEO H.K. Desai said on a conference call late Wednesday.
While InfiniBand has been catching on as a storage interconnect, QLogic plans to use the technology for server and clustered database applications for now.
“PathScale’s InfiniBand technology allows users to deploy large clusters of inexpensive rackmount and blade servers running Linux for high-performance applications,” Desai said in a statement. “This acquisition demonstrates our commitment to entering new, high-growth markets that enhance our ability to achieve accelerated growth.”
QLogic has been looking for new markets since selling its drive controller business to Marvell last year. Even after the PathScale acquisition, the company still has about $600 million in cash and no debt.
Desai said he expects the IB market to reach $400 million in three years. About 1 million IB ports had been deployed as of the end of 2005, he said. The technology “has the potential to penetrate the enterprise data center environment,” he said.
The deal will help secure markets for PathScale’s technology, said PathScale CEO Scott Metcalf. “QLogic’s strong market presence and operational excellence will assist us greatly in achieving InfiniBand market leadership,” he said.
PathScale’s biggest competitor is Mellanox, which bases its IB technology on PCI Express and PCI-X compared to PathScale’s HyperTransport interface. Desai said PathScale’s technology could support PCI Express if QLogic determines the need.
The acquisition is expected to close in early April.