Weakness in Market Prompting Vitesse to Delay New Product

By CARLOS MARTINEZ

San Fernando Valley Business Journal

Semiconductor maker Vitesse Semiconductor Corp. will delay release of its 10 gigabit-per-second network processor because the market is too weak for the device.

Camarillo-based Vitesse is the latest semiconductor maker to postpone development of the high-speed processor. IBM Corp. and Motorola Inc. have also backed off plans.

The processor, which would ramp up the speed and efficiency of ethernet networks, has seen demand slow to just a trickle as suppliers like Cisco Systems Inc. and Lucent Technologies Inc. and network operators like WorldCom Inc. and Verizon Communications Inc. have moved away from the ultra-high-speed devices.

“We don’t really see the market for the 10 gig processor at all,” said Jennifer Goman, a spokeswoman for Vitesse, “and we’re not seeing that customers are really looking to make that jump to 10 gigs.”

Vitesse said it would not abandon its network processing operations altogether, but will now focus on its slower devices for the 2.5 Gbit optical connection market.

Jeremy Lopez, an analyst with Morningstar Inc., said the company has been hit hard by the tech downturn and needs to reduce its research and development expenses. “The company is not able to keep in step with the market.”