The Biggest Costumer of Silicom Failed to Find a Second Source


Silicom reported all-time record revenues for the fourth quarter and full year ended December, 2017. Revenues for the fourth quarter of 2017 totalled $37.8 million, Silicom’s highestever
revenues for a quarterly period. This is up 33% compared to the fourth quarter of 2016. For the full year 2017, Silicom’s revenues totalled a record $125.7 million, up 25%
compared with $100.3 million in 2016.

Shaike Orbach, Silicom’s President & CEO, said that the growth is being driven by massive infrastructure transition. “Cloud & Web 2.0 companies, telcos, service providers and end-users are
all scrambling to keep up with the data-avalanche. For example, we have been chosen by one of the Cloud industry’s leading innovators to design and supply its next-generation Switch-Fabric-on-a-NIC product. This is a revolutionary concept that could, once it reaches a steady state, give us revenues of up to $75 million per year. We also continue to secure new design wins for our cyber security, SD-WAN, NFV, fintech and other Cloud solutions.”

On March, 2017, Silicom announced that it has achieved the most significant design win in its history. This design win, from a top-10 Cloud player, is for a highly customized version of Silicom’s 100-Gigabit high bandwidth switch fabric on a NIC cloud solution. Based on the customer’s guidance, Silicom forecasts that revenues related to the design win will build to more than $30 million per year. During the Earnings Conference Call yesterday, Shaike Orbach revealed hat this costumer had already made a purchase order of more than $10 million.

During the conversation he also said that one of Silicom’s major costumers tried to find second source to the company’s cards, but failed. “There is no second source. Seems like second source will not be available during 2018 and if at all it will, it’s going to be towards the end, but even that is not for sure. This is a very complex card. Concluding the development and making sure that everything works as it should, is not a simple task.”

Silicom from Kfar Sava, Israel, provides high-performance networking and data infrastructure solutions. Its product portfolio includes multi-port 1/10/25/40/100 Gigabit Ethernet server adapters, Intelligent Bypass solutions, Encryption accelerators, Ultra Low Latency solutions, Time Stamping and other innovative Smart adapters. These products are available for incorporation directly into our OEM customers’ systems, or provided as part of Silicom’s patented SETAC (Server To Appliance Converter).

Silicom’s website:

TSMC Invests $17 billion in 5-Nanometer Fab


TSMC announced last week the construction of its Fab 18, Phase 1 facility at the Southern Taiwan Science Park. TSMC’s Fab 18 is scheduled for production of the advanced 5-nanometer process. It will be its fourth 12-inch GigaFab® in Taiwan. The facility will use cleanroom with total area of approximately 160,000 square meters (25 standard soccer fields). It  The Company plans to complete construction of Phase 1 and begin equipment move-in in the first quarter of 2019, with volume production in early 2020.

Phase 2 will start construction in third quarter 2018 and also enter volume production in 2020, while Phase 3 construction is scheduled for third quarter 2019 for volume production in 2021. Once all three phases enter production, the facility’s estimated annual capacity will exceed one million 12-inch wafers, providing 4,000 high-quality jobs.

“TSMC’s Fab 18 represents three important commitments from our company: our commitment to future growth, our commitment to continue moving technology forward, and our commitment to Taiwan,” said Chairman Dr. Morris Chang. “Our estimated investment in 5-nanometer technology is approximately $24 billion, and total investment in Fab 18 will exceed $17 billion.”

TSMC currently employs more than 10,000 people in the Southern Taiwan Science Park, and once Phases 1,2, and 3 enter volume production, more than 14,000 TSMC employees will be living and working in the Tainan area. The Company plans to build its 3-nanometer production facilities there as well.

Mix Waze and Mobileye together, and you will get Nexar


Since 2016 Nexar from Tel Aviv deepening its cellular-based Vehicle-to-Vehicle network that present a new idea in the growing market Advanced driver assistance systems (ADAS). Unlike Intel’s Mobileye which demands specialized hardware, Nexar’s system is based on the widespread availability of cameras, sensors and computing resources on smartphones. The company has launched an iOS and Android app that collect data from the smartphones sensors, including its cameras and off-the-shelf dashcams, to provide advanced driver-assistance systems (ADAS) and collision prevention alerts to drivers.

Above the local application, Nexar operates cellular V2V communication that connect the cars to the AI system on the cloud. This system produce alerts and insights and transmit them to the relevant near by cars and other costumers such as municipalities, insurance companies and fleet managers. This broad information sharing system creates a practical V2V-like network, similar to Waze.

Last week Nexar has closed a $30 million round of funding led by Ibex Investors with participation from Alibaba Innovation Ventures, US-based Nationwide Insurance and the previous investors Aleph, Mosaic Ventures, Slow Ventures, True Ventures, and Tusk Ventures. This round brings the total raisings of the company to $48 million. In a recent post on the company’s blog, the co-founder and CEO Eran Shir, wrote that the company will provide critical data to insurance carriers and fleet providers, such as collision reconstruction and first notice of loss reports, which help expedite driver assistance, claims and prevent fraud.

“Our primary goal has always been to use AI-based systems to make driving smarter and safer,” Shir wrote. “Since the launch of Nexar’s app in 2016, drivers in 740 cities across 160 countries have driven more than 100 million miles with Nexar, with 10 million miles driven in the last month alone. In New York City, Nexar is used by more than 10% of the city’s ride-sharing drivers, and drivers using Nexar have seen a 30% reduction in collisions.”

Following the funding round, Nexar announced two additions to its executive team. Yoad Shraybom, the former CFO of The Walt Disney company in Israel, Turkey, and Greece, will be joining Nexar, as Chief Financial Officer. He will lead financial planning and accountability activities as the company grows its business operations. Veteran technology executive Marc Gaffan, will be  Chief Business Officer.

Nexar’s website:

EU fines Qualcomm $1.2B for Anti-competitive Practices

Commissioner Margrethe Vestager

The European Commission has fined Qualcomm €997m for abusing its market dominance in LTE baseband chipsets. The EU announced that “Qualcomm prevented rivals from competing in the market by making significant payments to a key customer on condition it would not buy from rivals. This is illegal under EU antitrust rules.” The Commission has also ordered Qualcomm to not engage in such practices in the future.

Commissioner Margrethe Vestager (photo above), in charge of competition policy, said: “Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance. Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals. These payments were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads. This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. This is illegal under EU antitrust rules.”

How to block Intel’s LTE chipsets

Baseband chipsets enable smartphones and tablets to connect to cellular networks and are used both for voice and data transmission. LTE baseband chipsets comply with the 4G Long-Term Evolution (LTE) standard. Although Qualcomm is the world’s largest supplier of LTE baseband chipsets, there are other chip manufacturers active in this market, including Intel. In 2011, Qualcomm signed an agreement with Apple, committing to make significant payments to Apple on condition that the company would exclusively use Qualcomm chipsets in its iPhone and iPad devices. In 2013, the term of the agreement was extended to the end of 2016.

The agreement made clear that Qualcomm would cease these payments, if Apple commercially launched a device with a chipset supplied by a rival. Furthermore, Apple would have had to return to Qualcomm a large part of the payments it had received in the past, if it decided to switch suppliers. The EU wrote in the announcement: “Internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel. Qualcomm’s exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end. Then, in September 2016, when the agreement was about to expire and the cost of switching under its terms was limited, Apple started to source part of its baseband chipset requirements from Intel.

The EU investigation concludes that Qualcomm held a dominant position in the global market for LTE baseband chipsets between at least 2011 and 2016, amounting to more than 90% for the majority of the period. “Based on a variety of qualitative and quantitative evidence, the Commission found that both consumers and competition have suffered as a result of Qualcomm’s conduct. The fine of € 997,439,000 (approximately $1.2 billion) represents 4.9% of Qualcomm’s turnover in 2017. “It takes account of the duration and gravity of the infringement, and is aimed at deterring market players from engaging in such anti-competitive practices in the future.”


AudioCodes Announced a new Voice.AI Business Unit

Shabtai Adlersberg, CEO of AudioCodes

AudioCodes from Lod, Israel, takes the move from Regular VoIP solutions into Artifial Intelligence (AI). The company announced today the opening of its new Voice.AI business unit, which will utilize AI technologies to deliver conversational analytics, productivity and actionable insights for businesses. The new business unit will operate in parallel to the existing Voice Networking unit which constitutes the core of AudioCodes’ business operations. It builds on current AudioCodes Voca speech recognition technology and SmartTAP call recording solutions.

Verbal communications remain the most effective method for complex and critical business transactions and conversations. Yet, most verbal communication is not recorded and is not converted into actionable insights to enhance business productivity. AudioCodes SmartTAP provides enterprises with session recording of IM, voice, video and content sharing for compliance and productivity improvement. Developed over the past seven years, SmartTAP has been adopted largely by financial and utility companies, as well as healthcare and educational institutions.

“We at AudioCodes pride ourselves as a leading provider of voice DNA to the evolving digital workplace. Voice is the most fundamental form of human communications” said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes (Photo above). “We believe that verbal business communications represent untapped potential for productivity enhancements and actionable insights. With the new Voice.AI business unit, we are leveraging our large install base and extensive technological know-how to enable large enterprises to realize business benefits from day-to-day conversations.”

More information:

Semiconductors M&A Fever Cools Down

Semiconductors Mergers

The historic flood of merger and acquisition agreements that swept through the semiconductor industry in 2015 and 2016 slowed significantly in 2017, says IC Insights in a recent research. According to IC Insights’ new 2018 McClean Report, the total value of M&A deals reached in the year was still more than twice the annual average of a decade ago.

In 2017, about two dozen acquisition agreements of a combined value of $27.7 billion were much less than the record-high $107.3 billion set in 2015 and the $99.8 billion total in 2016. Prior to the explosion of semiconductor acquisitions that erupted several years ago, M&A agreements in the chip industry had a total annual average value of about $12.6 billion between 2010 and 2015.

Two large acquisition agreements accounted for 87% of the M&A total in 2017, and without them, the year would have been subpar in terms of the typical annual value of announced transactions.  The falloff in the value of semiconductor acquisition agreements in 2017 suggests that the feverish pace of M&A deals is finally cooling off. M&A mania erupted in 2015 when many semiconductor companies began buying other chip businesses to offset slow growth rates in major end-use applications such as smartphones, PCs, and tablets.

New Markets fueled M&A Fever

They also wanted to expand their reach into huge new market opportunities, like the Internet of Things (IoT), wearable systems, and highly “intelligent” embedded electronics, including automated driver-assist capabilities and fully autonomous vehicles in the future. With the number of acquisition targets shrinking, industry consolidation through M&A transactions decelerated in 2017.  Regulatory reviews of planned mergers by government agencies in Europe, the U.S., and China have also slowed the pace of large semiconductor acquisitions.

One of the big differences between semiconductor M&A in 2017 and the two prior years was that far fewer megadeals were announced.  In 2017, only two acquisition agreements exceeded $1 billion in value (the $18 billion deal for Toshiba’s memory business and Marvell’s planned $6 billion purchase of Cavium). Ten semiconductor acquisition agreements in 2015 exceeded $1 billion and seven in 2016 were valued over $1 billion.

The two large acquisition agreements in 2017 pushed the average value of semiconductor M&A pacts to $1.3 billion. Without those megadeals, the average would have been just $185 million last year.  The average value of 22 semiconductor acquisition agreements struck in 2015 was $4.9 billion.  In 2016, the average for 29 M&A agreements was $3.4 billion, based on data compiled by IC Insights.

More information: IC Insights

Global Data Center to double its facility in Herzliya

Global Data Center

Israel’s Global Data Center is doubling its Herzliya data center facility from 2,250 square meters to 4,500 square meters. The company announced that it would invest tens of millions of Shekels to complete the expansion in the first half of 2018. Global Data Center operates a secured underground data center facility in Hertzliya built in compliance with global standards. Doubling the data center’s area joins other measures taken during the past year, including the tripling of the business continuity space and providing customers a quick move to work at the Herzliya facility in an emergency.

Global Data Center was founded by Moshe Lasman in 2013 in cooperation with and the financial backing of Viola Group and Leon Recanati’s Glenrock Investments. Lasman previously served as the head of the Outsourcing Department at IBM Israel and head of Global Services at HP Israel. The data center in Herzliya serves public and private companies in the insurance, financial, and technology sectors.

Moshe Lasman CEO of Global Data Center
Moshe Lasman CEO of Global Data Center

Critical Mass of Data

Among them: Harel Insurance Investments and Financial Services Ltd., Clal Insurance Enterprises Holdings Ltd., IBI Investment House Ltd., Israel Chemicals Ltd., FMR Computers & Software and technology leaders such as ECI Telecom Ltd., Infinidat Ltd., Varonis Systems Inc., Zerto Ltd. and SolarEdge Technologies Inc. “The current data center has almost used up its potential space,” said Moshe Lasman. “The rapid growth of information has created a need for physical spaces in Israel to host IT infrastructures for companies with a critical mass of data. Some have already reserved space in the new section which will open in a few months.” Lasman added: “IT managers prefer to rent an external site and benefit from scalability, improved cash flow by converting a capital expense into an operating expense.

“We offer high data accessibility, physical and digital security, energy savings, comprehensive business disaster recovery and more. All cloud services need to host the hardware on which the data resides at a particular physical space. From this point, the path to data centers’ success is short.” The site provides hosting services for IT operations units, full business continuity and disaster recovery, as well as on-site and remote back-up, cloud computing services, on-demand control and operating services, andsmart hands services.

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