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Cisco to Buy Stealth Semiconductor Maker Leaba

The company is making a rare hardware acquisition, spending $320 million for the 2-year-old fabless chip maker.


Cisco Systems in recent years has been putting a lot of effort behind growing its software portfolio as it looks to become a larger player in such areas as cloud computing and software-defined infrastructures.

However, officials with the networking giant aren't abandoning Cisco's hardware heritage, as illustrated by their decision to buy Leaba Semiconductor, a fabless semiconductor company based in Israel that is still in stealth mode, for $320 million.

Neither Cisco nor Leaba said much about the deal, and there are few details about what Leaba is working on. On the company's Website, Leaba officials said it is "operating in stealth mode to provide innovative solutions for significant infrastructure challenges" and counts "blue-chip investors" as its backers.

For his part, Rob Salvagno, vice president of corporate business development at Cisco, was vague about what Leaba will do for the company after the deal closes, saying in a post on Cisco's blog that the "acquisition advances our innovation strategy, supports continued differentiation of Cisco products and delivers on our goal to provide best-in-class solutions for our customers."

"By combining Leaba's semiconductor expertise with the Cisco engineering team, we will accelerate our plans for Cisco's next generation product portfolio and bring new capabilities to the market faster," Salvagno wrote.

Leaba employees will become part of Cisco's Core Hardware Group, which is led by Senior Vice President Ravi Cherukuri.

The company was founded in 2014 by CEO Eyal Dagan and CTO Ofer Eini, who together launched Dune Networks, a company that was bought by Broadcom for $200 million.

Cisco officials for the past several years have been looking to expand the company's reach beyond its legacy as a network switch and router maker, becoming a significant player not only in the data center but also the cloud and in such areas as the Internet of things (IoT). Software is a key part of this effort, which has been a focus at the company's Partner Summit 2016 event this week. The same day Cisco announced the Leaba deal, officials unveiled Digital Network Architecture (DNA), a software platform designed to accelerate their customers' digitization efforts.

The day before, Cisco announced it is buying CliQr Technologies, which sells its CloudCenter cloud orchestration platform.

However, Cisco officials also see its development of ASIC chips for networking gear as a key differentiator in an increasingly competitive networking space.