Silicom Ltd. and its subsidiaries (Silicom) is an industry-leading provider of high-performance networking and data infrastructure solutions.
Designed primarily to improve performance and efficiency in Cloud and Data Center environments, the company’s solutions increase throughput, decrease latency and boost the performance of servers and networking appliances, the infrastructure backbone that enables advanced Cloud architectures and leading technologies like NFV, SD-WAN and Cyber Security. The...
Silicom Ltd. and its subsidiaries (Silicom) is an industry-leading provider of high-performance networking and data infrastructure solutions.
Designed primarily to improve performance and efficiency in Cloud and Data Center environments, the company’s solutions increase throughput, decrease latency and boost the performance of servers and networking appliances, the infrastructure backbone that enables advanced Cloud architectures and leading technologies like NFV, SD-WAN and Cyber Security. The company’s innovative solutions for high-density networking, high-speed fabric switching, offloading and acceleration, which utilize a range of cutting-edge silicon technologies as well as FPGA-based solutions, are ideal for scaling-up and scaling-out cloud infrastructures.
The company’s products are used by major Cloud players, service providers, telcos and OEMs as components of their infrastructure offerings including both add-on adapters in the Data Center and stand-alone virtualized/universal CPE devices at the edge.
Products
The company’s products are consisted of:
Server network interface cards (Server Adapters) - These adapters are used mostly in networking appliances which are used both in the Cloud (including public cloud and On Premise cloud) and in the Edge.
Smart Cards - Intelligent and/or programmable cards, with features such as encryption, acceleration, data compression, redirection and switching, packet processing, time stamping, packet capture solutions, ultra-low latency solutions, and other offloading features. These products are used mostly inside servers which are a part of Cloud, Telco and Enterprise Data centers or at the Edge.
Smart Platforms - (Edge Products) - including virtualized Customer-Premises Equipment (vCPE) and universal Customer-Premises Equipment (uCPE) (together, ‘CPE’), Edge devices for SD-WAN, SASE, Telco dedicated routers and NFV deployments.
Server Adapters
The company has developed a line of products for the server networking industry, which facilitates interaction between servers and switches, allowing them to communicate with each other through a larger number of ports and with higher performance than their original manufacturer designed capabilities. The company’s designs have resulted in powerful products that allow server-based systems to fully exploit the high-speed potential of 1/10/25/40/100/200/400 Gigabit Ethernet. The products have either one, two, four, six, or eight ports, which plug into servers which need to have such capabilities. Some of these products include bypass functionality which allows continuation of traffic even when the server carrying the card is failing.
Smart Cards
The company’s Smart Card products include smart server adapters such as: (a) redirector and switching cards, with and without x86 CPU (b) encryption and data compression hardware acceleration cards, (c) FEC (Forward Error Correction) acceleration and offloading cards, and (d) FPGA based cards.
The company’s redirector and switching cards improve performance by: (a) enabling switching fabric on a network interface card (‘NIC’) while (in some cases) providing separate data path and management path for the switching fabric and sometimes eliminating the need for a Top Of Rack switch within the Cloud, (b) enabling traffic filtering in order to reduce the amount of traffic received by the server, limiting it to only essential traffic for the server CPU, and consequently improving server performance, (c) load-balancing between external servers and/or CPUs and/or CPU cores increasing the efficiency of the server, and (d) offloading some of the server CPU tasks to the CPU and/or the switch on the NIC.
The company’s product line of high-performance encryption cards is designed to improve the throughput of servers with respect to which the traffic into and from them requires encryption or decryption. The products improve the performance of such servers by independently executing encryption tasks, thereby accelerating the encryption process and freeing the CPUs of such servers for other activities. This product line can off-load not only encryption functionality, but compression functionality as well. The market need for compression off-load was previously limited to some content delivery and WAN optimization networking applications; however, such compression off-load is now becoming increasingly important in the storage market especially within the Big-Data area, which is the market sector that is the primary target of this functionality.
The company’s FEC cards offload the Forward Error Correction tasks that are supposed to be carried out by the CPU of the Distributed Unit within 4G/5G mobile deployments, in order to allow for better performance. Such performance is more necessary in the 5G space, due to the higher bandwidth, and additional calculations and processing that need to occur at the edge, while at the same time more Radio Units are required to be attached to each DU. Therefore, it is essential to offload the FEC task from the main CPU onto a card.
The company’s FPGA based cards are divided between two families of cards, based on the world’s largest providers of such FPGA components: AMD and Intel. The company’s AMD based cards are sold mostly in the Packet Capturing market and towards the High Frequency Trading market, or HFT market. For the Packet Capture market, the company sells cards which include the company’s IP for Packet Capturing. For the HFT market the company sells mostly ‘naked’ cards which do not include any software code other than the code which is required by the company’s customers in order to add their own code to the cards. For some of the company’s AMD based cards, the company provides a framework which the company calls Packet Mover. Such framework allows the customer to add to the FPGA its own application, while the various interfaces are already a part of the framework, providing optimized solutions for low latency, throughput and speed. The company’s Intel based FPGA cards are a result of a close relationship with Intel over the past few years, during which the company has engaged in co-development and co-marketing activities with Intel. As a result of such cooperation, the company now has a variety of Intel based FPGA Smart Cards addressing mostly the cloud and data center infrastructure market. Such cards include Standard NIC on top of the FPGA making them especially suitable for these markets.
Smart Platforms
The company’s Smart Platform products are used at the Edge as CPEs (including also uCPEs and vCPEs) which are used by Telcos, Cloud Players, service providers and Application vendors (OEMs) to provide a variety of services to their customers. These are full computing platforms in a networking intensive environment and many of the technologies incorporated into these platforms are similar to those incorporated into the company’s Server adapters and Smart cards products.
The company’s products include an entry level of very low end IoT devices, going through typical branch/CPE units and up to rack mounted devices targeting large scale branches.
The main application for which the company’s CPE/Edge devices are used is SD-WAN, for which most of the company’s systems have been deployed. The devices are also frequently used to provide SASE, NFV, Telco dedicated routers and other such services. The company’s capabilities within the Edge world include modular approach and secured management features, as well as customized designs, to help the customer achieve its required challenging performance, data volume and infrastructure-scale-up goals. The company’s Smart Platforms products offer reliability and robust performance, addressing challenges of SD-WAN and other network functions integration and deployment.
The company also sells Smart Platforms which consist of a combination of all product families in a single product. An example of such integration is the company’s IBS (Intelligent Bypass Switches), which combine functionalities, as well as design elements from each of the company’s Server Adapters, the company’s Smart Cards and its Smart Platforms.
Principal Markets
In 2023, approximately 85% of the company’s sales were in North America, 13% of the company’s sales were in Europe, and 2% of the company’s sales were in the Asia-Pacific.
Manufacturing and Suppliers
The company’s manufacturing operations primarily consist of producing finished goods on the company’s own, with assistance from sub-contractors, from (i) components purchased from third parties, and (ii) sub-assemblies manufactured by sub-contractors. In addition, the company performs testing and quality assurance procedures with respect to the components and sub-assemblies which are incorporated into the company’s final products and to the final products themselves.
The company has been certified as complying with ‘ISO-28001:2022’, ‘ISO 9001:2015’, ‘ISO 27001:2013’, and ‘ISO 14001:2015’, which are the standards used in the company’s industry.
Some key components in many of the company’s products are manufactured by Intel and Broadcom. During regular supply periods the company maintains a sufficient inventory of these components to protect against delays in deliveries.
Marketing Channels
The principal market sectors for the company’s products are:
Providers of applications on Network appliances, including mostly SD-WAN, Cyber Security and Application Delivery applications;
Telcos / Carriers / service providers deploying CPEs/Edge for SD-WAN, SASE and NFV;
Mobile Operators/Telcos/Carriers deploying Telco routers and 4G/5G infrastructure; and
The ‘Cloud’.
The company’s main business model for its line of products is called the Design Win Model. The following are the main aspects of this model:
The company approaches a potential customer or are approached by such customer.
If the potential customer shows interest in the products and the achievement of a business relationship with the potential customer is possible, the company ships products for such potential customer's evaluation.
During the evaluation process the potential customer receives a few units of the relevant product for initial basic testing. If the evaluation process is successful, the company ships products for qualification.
During the qualification process the potential customer usually purchases a larger amount of the company’s products for more specific testing, which may include certain adaptations of the company’s products to its needs.
If the qualification process is successful, the company enters into negotiations regarding the terms of a business relationship.
In some cases, typically with the larger customers and with respect to Smart Cards and Smart Platforms, the evaluation and qualification process may take 12 months or more.
Once all phases mentioned above are successfully concluded, the customer will purchase products from the company by placing purchase orders (under which the company’s products are to be sold to such customer) in order to either (i) incorporate such products within its systems, and thereafter sell or deploy such systems with the company’s cards embedded in them, or, (ii) deploy the company’s Smart Platform products within a network. The sale or deployment of the company’s products within such systems or network, as applicable, is the objective of the company’s Design Win Model. In most cases, once the company secures a Design Win, the company’s customer will continue to buy its products for as long as it (i) continues to sell or deploy its system in which the company’s products are incorporated, or (ii) continues to deploy the company’s Smart Platform as part of its network.
For all of the company’s Server Adapters and for some of the company’s Smart Cards and Smart Platforms, the company’s sales and marketing have been mostly carried out through a network of strategic relationships with leading OEMs that sell the company’s products, generally as a part of their systems and sometimes under their own private labels. The company’s OEM customers are mostly active in the SD-WAN market, Cyber Security market, Data Storage market, Application Delivery market, Traffic Management market, Network Monitoring market, WAN Optimization market and other server-based applications markets. The company’s OEM customers sell their products to Telcos, Governments, Enterprises (headquarter and branch) and to Data Centers (regular and virtualized, including to the Cloud). The company’s strategy of carrying out strategic relationships with OEM customers continues to be a significant part of the company’s strategy. These relationships enable the company to take advantage of the superior financial resources and market presence of these companies to increase the company’s sales and establish, maintain and strengthen the company’s position and reputation in the market. In addition, relationships with OEMs improve access to new technologies developed by such OEMs, thereby ensuring smooth integration of the company’s products and technology with those of the OEMs.
In addition, due to the trends that the company sees in its industry, including primarily the shift to the Cloud and the trend of Disaggregation (non-proprietary standards that allow separate parts of the network to be purchased separately) and Decoupling of Hardware and Software, the company is implementing an additional marketing strategy which involves the company’s direct sales to major Telcos, Cloud players, and service providers. In some cases, such sales involve a relationship with an independent software vendor, which is the case in most of the company’s SD-WAN Edge Platforms sales.
The main aspects of the OEM business model, by which in most cases the company’s customer will continue to buy its cards for as long as it continues to sell or deploy its system, are similar in the company’s business model when the company sells directly to Telcos or other service providers.
The company’s cooperation with Intel has resulted in material benefits to its selling process. Due to the company’s close relationship with Intel, the company mostly uses their components in its products, and as such they provide the company with assistance in the sales process, mostly with Smart Cards and Smart Platforms.
Patents and Licenses
On April 8, 2010, the company filed a patent application with the United States Patents and Trademarks Office, or the USPTO, for the ‘Server-Based Network Appliance’. On June 12, 2012, the company was issued patent No. 8,199,523 entitled ‘Server-Based Network Appliance’ from the United States Patent and Trademark Office, which relates to a server-based network appliance in which a computer motherboard is mounted in a case with the bus slots of the motherboard adjacent to the rear side of the case.
On September 16, 2013, the company acquired all of the intellectual property related to the unique Virtualization Off-Load Engine developed by Net Perform Technology, Ltd., a privately held company registered in Hong Kong, China. Despite perceived exclusive access to this product, and the company’s best efforts during the acquisition process to secure the same, internal or external parties may assert a claim of infringement regarding such intellectual property. The company does not consider this intellectual property to be material for the company’s operations.
On February 8, 2015, the company filed a patent application in the USPTO with respect to Hybrid Networking Application Switch. On January 2, 2018, the company was issued patent No. 9,858,227 entitled ‘Hybrid Networking Application Switch’ from the United States Patent and Trademark Office. The patent relates to a unique solution for combining functionalities of a rack mounted networking switch and a rack mounted server into a single rack mounted enclosure comprising a hybrid networking application switch or an accelerated hybrid networking application switch.
Competition
With respect to Server Adapters, the company’s main competitors are Nvidia, Intel, and Broadcom.
In the Smart Cards products sector, the company’s competition is fragmented, and differs with respect to the specific solution being offered by the company. In this sector, Marvel, Nvidia, Netronome, Napatech, Molex, Lanner, and Caswell compete with certain of the company’s Smart Cards. In some cases of FPGA (Field Programmable Gate Array) based cards, Intel and AMD also compete with the company’s Smart Cards, however, as with the Server Adapters space, they target mostly the biggest accounts and only with mainstream products while for other accounts they cooperate with the company.
In the Smart Platforms products sector, the company’s main competitors are Caswell, Lanner, Advantech, and Nexcom.
Governmental Regulation
The company receives certain tax benefits and reduced tax rates from the Israeli government due to the company’s status as a ‘Preferred Technological Enterprise’ under the Law for the Encouragement of Capital Investments-1959, as amended.
Research and Development
In 2023, the company’s research and development expenses were U.S.$ 20,638 thousand.
History
Silicom Ltd. was founded in 1987. The company was incorporated under the laws of the state of Israel in 1987.
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