Intel to Buy Networking Startup -- WSJ

By Asa Fitch 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 11, 2019).

Intel Corp. is buying startup Barefoot Networks Inc. in a bid to scale up the smaller company's networking-chip technology and compete with Broadcom Inc.

While Intel is the largest computer-chip maker in the U.S., it doesn't currently make chips that manage communication via Ethernet, a widely used technology to connect a vast network of computers and servers. That arena is dominated by San Jose-based Broadcom.

The purchase, Intel Executive Vice President Navin Shenoy said, is aimed at addressing an explosion of data that has bolstered demand for computing power to analyze it and networking systems to exchange it within data centers.

Mr. Shenoy said the acquisition is expected to close in the third quarter. He declined to provide the deal's value.

Barefoot's technology stands out from other Ethernet chips because of its flexibility: Customers can program the chips to operate more efficiently according to their specific uses of it.

Investors in Barefoot before Intel's purchase included tech giants Alphabet Inc., parent of Google, Alibaba Group Holding and Tencent Holdings, as well as Goldman Sachs Group Inc. and venture-capital firms, according to Barefoot's website.

Intel's deal follows renewed investment interest in networking technology in recent months. In March, graphics and artificial-intelligence chip maker Nvidia Corp. announced it would buy networking firm Mellanox Technologies Ltd. for roughly $7 billion.

The Barefoot deal illustrates how Chief Executive Bob Swan, who became the permanent chief in January, is willing to move Intel into unfamiliar territory in search of more revenue in a bigger overall market.

The urgency of Mr. Swan's efforts has intensified as Intel weathers volatility in its core chip business. Big cloud-computing companies have held off on purchases of new chips this year after a glut of buying last year, contributing to Intel's first decline in data-center chip sales in seven years during the first quarter. Intel in April also revised its revenue for this year to $69 billion from an earlier forecast of $71.5 billion.

Intel has long dominated the market for computer central-processing units and successfully pushed its chips into data centers as cloud-computing expanded, but it has struggled to gain a similarly dominant foothold in other technologies.

Barefoot was co-founded in 2013 by Nick McKeown, a Stanford University professor, and quickly attracted investment as it geared up to challenge Broadcom.

Write to Asa Fitch at [e-mail]

(END) Dow Jones Newswires

June 11, 2019 02:47 ET (06:47 GMT)

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