PMC-Sierra, Inc. designs, develops, markets and supports high-speed broadband
communications and storage semiconductors and MIPS-based processors for service
provider, enterprise, storage, and wireless networking equipment. We have more
than 180 different semiconductor devices that are sold to leading equipment manufacturers,
who in turn supply their equipment principally to communications network service
providers and enterprises. We provide superior semiconductor solutions for our
customers by leveraging our intellectual property, design expertise and systems
knowledge across a broad range of applications.
Worldwide demand for Internet connectivity and the volume of information transmitted
over the Internet have both grown steadily over the last few years. As data
traffic increases, communication service providers seek to increase their revenues
by delivering a growing range of data services to their customers in a cost-effective
manner. To provide advanced voice, data, and video services, service providers
must transition their voice-centric infrastructure to data-centric networks.
Other commercial enterprises are also expanding their data networks to compete
cost-effectively in a world where more and more daily business operations require
Internet connectivity and the ability to move, store and manage large quantities
of data. Different types of data transmitted at different speeds over the Internet
require service providers and enterprises to invest in multi-service equipment
that efficiently handles, processes and transports many different types of traffic.
One industry standard that packages information into a fixed-size cell format
for transportation across networks is ATM, or Asynchronous Transfer Mode. Many
service providers deploy equipment that handles this protocol because it can
support voice, video, data, and multimedia applications simultaneously.
Our high-speed semiconductor solutions are based on our strong knowledge of
network applications, system requirements and networking protocols.
Our sales and marketing strategy is to have our products designed into our
customers’ equipment by developing superior products for which we provide premium
service and technical support. We maintain close working relationships with
many of our customers. Our marketing team is focused on developing new products
that meet the needs of our customers in our target markets. We are often involved
in the early stages of design concerning our customers’ plans for new equipment.
This helps us determine if our existing products can be used in their new equipment
or if new devices need to be considered for the application. To assist us in
our planning process, we are in regular contact with our largest customers to
discuss industry trends, emerging standards and ways in which we can assist
in their new product requirements.
Our competitors may be classified into two major groups. First, we compete
against established peer-group semiconductor companies that focus on the communications
semiconductor business. These companies include Agere Systems, Applied Micro
Circuits Corporation, Broadcom, Emulex, Exar Corporation, Conexant Systems,
Marvell Technology Group, Qlogic, Silicon Image, Transwitch and Vitesse Semiconductor.
These companies are well financed, have significant communications semiconductor
technology assets, have established sales channels, and depend on the market
in which we participate for the bulk of their revenues.
Second, we also compete with major domestic and international semiconductor
companies, including Agilent, Cypress Semiconductor, Intel, IBM, Infineon, Integrated
Device Technology, Maxim Integrated Products, Motorola, and Texas Instruments.
These companies are concentrating an increasing amount of their substantial
financial and other resources on the markets in which we participate.
Over the next few years, we expect additional competitors, some of which may
also have greater financial and other resources, to enter the market with new
products.
We are also expanding into some markets, such as the storage and wireless infrastructure
and generic microprocessor markets, that have established incumbents with substantial
financial and other resources. Some of these incumbents derive a majority of
their earnings from these markets. We expect continued strong competition in
these markets.