Intel, Emulex Join at the Chip

PHOENIX -- Storage Networking World Spring 2003 -- In an unusual joint development deal for Intel Corp. (Nasdaq: INTC), the chipmaker is teaming up with Emulex Corp. (NYSE: ELX) to create a family of storage controller processors for Fibre Channel, Serial ATA (SATA), and Serial Attached SCSI (SAS) that will share a common development interface (see Intel, Emulex Develop Storage Chips).

The agreement, announced yesterday at SNW, will pool intellectual property and engineering personnel from both companies. No financial details were disclosed, but Intel and Emulex say no material licensing revenue is expected from the deal. The companies promise delivery of their first jointly developed products in 2004 but aren't providing any details of what those will look like (or what they'll be named).

Emulex will develop protocol controller hardware, firmware, and drivers; Intel will bring its low-power XScale processors -- designed for embedded applications -- to the party and will also manufacture the chips using its 90-nanometer process technology.

"What's really notable is that Intel is allowing, for the first time, an embedded XScale into a design outside of Intel," says Sean Lavey, senior research analyst at IDC.

Emulex will sell the resulting FC products, while Intel will sell the SATA and SAS chips. But the larger goal is for both players to entice storage OEMs with the fact that the family of chips will have a common development interface: The chips will use Emulex's Service Level Interface (SLI) across all three disk interfaces. That can allow storage systems vendors to get to market and more easily reuse their code.The deal was not, as we had speculated earlier, about the two vendors' work together on iSCSI, which continues separately (see Intel & Emulex: iSCSI Tag Team?).

As for the benefits the deal brings to Emulex, Mike Smith, the firm's executive VP of marketing, says: "We get the ability to build next-gen products with unprecedented power, and we get access to Intel's fab technology." [Ed. note: Fab as in "fabulous"? or fab as in "fabrication"? He probably means both.]

Intel, meanwhile, sees it as a way to make the jump to serial disk interface technologies more quickly by using Emulex's Fibre Channel technology. "When we looked under the covers at SATA, we saw that it was very similar to Fibre Channel," says Chris Croteau, market development director in Intel's storage components division.

If the companies can execute on their plans, the partnership should definitely help Emulex compete with QLogic Corp. (Nasdaq: QLGC) and Agilent Technologies Inc. (NYSE: A) in the Fibre Channel components space. "We can now get into the embedded space, disk arrays, and blade servers," Smith says.

Another byproduct of the Intel deal is that Emulex will apparently end its supplier agreement with LSI Logic Corp. (NYSE: LSI), which currently provides Emulex with an FC-to-PCI chip.However, says IDC's Lavey, it remains to be seen how well the Intel/Emulex arrangement will play out.

"There are some execution questions here... Intel hasn't done custom ASICs before," he says, adding that it's also unclear exactly how much access Emulex will actually get to Intel's chip manufacturing crown jewels.

Todd Spangler, US Editor, Byte and Switch