CISCO’S NEW APPROACH – CHIP MAKING

It’s said that Cisco is finally embracing a new approach to its chip making.

Dan Gallagher at the WSJ reports that Cisco is finally thinking outside the box – its own, in fact.  And that the company has announced a new family of routers, along with a new chip architecture called Cisco Silicon One.  The company has designed its own chips in the past, but those were available only on Cisco equipment.  In making the announcement about the new chip, the company also indicated that the latest chip designs would be available to customers to buy on their own.   It’s projected that this change will mean that the company will be able to win over a key part of the networking market that has thus far been out of its reach.  The large companies that spend the most on chips each year – Amazon, Google, Microsoft, Facebook – prefer to buy the chips outright and design their own products that are specific to their needs.  And, in a large and growing market, that factor has caused Cisco to be left out of the game – one that’s estimated to be poised to grow 1.2% in 2020.  Cisco’s revenue is expected to decline 2% for their year ending in July, but that outcome could well be changed with the new approach.  We’ll follow the progress and report back.

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