View of the InfiniBand market: "Based on data provided by IDC in April 2008 in a report called “Worldwide InfiniBand 2007-2011 Forecast Update,” the number of InfiniBand HCAs expected to ship to the market will increase at a 51.5% compound annual growth rate (CAGR) from 124,000 in 2006 to 991,000 in 2011. IDC also forecasts that the number of InfiniBand switch ports expected to ship to the market will increase at a 54.5% CAGR from 177,000 ports in 2006 to 1.56 million ports in 2011. IDC credits the growth of InfiniBand usage to increasing deployment in HPC, scale-out database, shared virtualized I/O, and financial services environments."
Customer concentration: "We sold products to more than 257 customers worldwide in the year ended December 31, 2008, many of whom are at the evaluation stage of their product development. We currently anticipate that several of these evaluations will result in increased orders for our products as they move into the production stage. In the year ended December 31, 2008, sales to Hewlett-Packard accounted for 19% of our total revenues, sales to Sun accounted for 17% of our total revenues and sales to QLogic Corporation accounted for 11% of our total revenues."
Foundry, assembly and test: "We use Taiwan Semiconductor Manufacturing Company, or TSMC, to manufacture and Advanced Semiconductor Engineering, or ASE, to assemble, package and production test our IC products. We use Flextronics to manufacture our standard adapter card products and custom adapter cards and switch systems."
Employees: "As of December 31, 2008, we had 262 full-time employees and 41 part-time employees located in the United States and Israel, including 215 in research and development, 39 in sales and marketing, 28 in general and administrative and 21 in operations. Of our 262 full-time employees, 217 are located in Israel."
Patent foundation: "As of December 31, 2008, we had 15 issued patents and 25 patent applications pending in the United States., 5 issued patents in Taiwan and 1 issued patent and 5 applications pending in Israel, each of which covers aspects of the technology in our products."
IP licensed from Vitesse: "In addition to our own IP, we also rely on third-party technologies for the development of our interconnect IC products. Pursuant to a license agreement dated September 10, 2001, Vitesse Semiconductor Corporation, or Vitesse, a provider of high-speed physical layer semiconductor products for the communications market, granted us a non-exclusive, worldwide, perpetual right and license to use and incorporate into our InfiniBand products Vitesse’s 2.5Gb/s SerDes macro cell implemented in TSMC’s 0.18 micron Complementary Metal-Oxide Semiconductor, or CMOS, processes. We agreed only to use Vitesse’s technology licensed under the agreement for integrated SerDes applications. In exchange for this license, we agreed to pay a royalty to Vitesse based on the total number of devices sold by us that use Vitesse’s technology. In February 2008, Vitesse discharged us from paying royalty payments due under this agreement."
