Adaptec 2002 Annual Report Download - page 5

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By leveraging the knowledge and technical expertise of companies such as PMC−Sierra, the OEMs are able to
focus their efforts on their core competencies. In many cases, it can take several years before a new
silicon chip or chip set can be designed, manufactured, tested, and released to full production for a
customer. It is essential, therefore, that companies like PMC−Sierra that develop the chips to be
incorporated into the OEM equipment work very closely with their OEM customers so that together they can
optimally meet the equipment needs of the service providers.
PRODUCTS
We have more than 120 revenue−producing products in our portfolio. Our networking products comprise
communications semiconductors − − including microprocessors − − that are used in many different types of
equipment throughout the network infrastructure. While our current networking product development efforts
are focusing on all the four areas of the network infrastructure described below, less than 10% of our
current revenues are derived from the storage and consumer markets. One of our key strategies is to broaden
into these markets.
Our non−networking segment, comprised of a single chip used in a consumer medical device, wound down in the
second quarter of 2002, with only insignificant revenues thereafter to meet remaining customer requirements.
Our networking products are sold primarily into four areas of the worldwide network infrastructure, which we
call Metro, Access, Enterprise/Storage, and Consumer−related markets. Many of our products are designed with
standardized interfaces between chips so our customers can easily develop and implement solutions involving
multiple PMC−Sierra products.
The following briefly describes PMC−Sierra's view of the Metro, Access, Enterprise/Storage and
Consumer−related areas of the internet infrastructure and some typical equipment that may include our chips
and chipsets. Due to the complexity of the telecommunications network, it is not possible to sharply
delineate the networking functions or markets served. In addition, many of our products may be used in
multiple classes of networking equipment that are deployed across all of the market areas identified below,
while some of our other products have highly specialized applications. For example, our microprocessors can
be used in many networking equipment applications (such as high−speed routers or networked printers), while
our Paladin chip may only be used in a single application (power amplification for wireless base stations).
In some situations, different OEMs might use our chips or chipsets in equipment addressing more than one of
the market areas noted below.
o Access: this area of the telecommunications network infrastructure
encompasses wired and wireless equipment that aggregates transmissions
from the home or office and connects that traffic to the metro and the
wide area network (WAN). For example, our semiconductors would be used
in equipment such as digital subscriber line access multiplexers,
wireless base stations, add−drop multiplexers (which add and drop
signals and streams of data from optical networks) and switches (which
direct the data traffic to other destinations within the network).
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