PMC-Sierra, Inc. (“PMC” or the “Company”) designs, develops, markets and supports semiconductor solutions for the Enterprise Infrastructure market and the Communications Infrastructure market. The Company offers worldwide technical and sales support through a network of offices in North America, Europe and Asia. We have approximately 400 different semiconductor devices that are sold to leading equipment and design manufacturers, who in turn supply their equipment principally to service providers, carriers and enterprises globally. We provide semiconductor solutions for our customers by leveraging our intellectual property, design expertise and systems knowledge across a broad range of applications and industry protocols.
PMC was incorporated in the State of California in 1983 and reincorporated in the State of Delaware in 1997. Our Common Stock trades on the NASDAQ Global Select Market under the symbol “PMCS”.
Our principal executive offices are located at 3975 Freedom Circle, Santa Clara, California 95054. Our internet webpage is located at www.pmc-sierra.com; however, the information accessed on or through our webpage is not part of this report. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports are available, free of charge, on our webpage after we electronically file or furnish such material with the Securities and Exchange Commission (“SEC”). The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100F Street, NE., Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Our fiscal year normally ends on the last Sunday of the calendar year. Fiscal years 2009, 2008 and 2007 consisted of 52 weeks.
We sell our semiconductor solutions primarily into two general markets: the Enterprise Infrastructure market and the Communications Infrastructure market. The products and solutions that we sell into the Communications infrastructure market are largely driven by the capital spending of service providers in the communications networking equipment industry. Our products and solutions that are sold into the Enterprise Infrastructure market are driven primarily by the capital spending of corporations, enterprises and smaller businesses. In 2009, our revenues were derived approximately 50% from the Communications Infrastructure market and 50% from the Enterprise Infrastructure market.
The general market areas that we currently serve and some typical equipment in those markets that contain our semiconductor solutions are described below. Due to the complexity of the global communications network, it is not possible to sharply delineate 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 others have highly specialized applications.
The Communications Infrastructure market encompasses wired, wireless and Passive Optical Networking (“PON”) devices used in access, aggregation and transport equipment such as optical transport platforms, edge routers, multi-service switches, and wireless base stations that gather and process signals in different protocols, and transmit them to the next destination.
For high-capacity data communication over fibre optic systems, the standard used is Synchronous Optical Networks (“SONET”) in North America and parts of Asia, and is Synchronous Digital Hierarchy (“SDH”) in the rest of the world. In addition to using SONET/SDH to increase the bandwidth or capacity, of their networks, many service providers have started implementing packet-based transport equipment in the core and access portions of the network using the new standard called Optical Transport Network (“OTN”).
With demands for access bandwidth increasing, PON is being deployed by carriers worldwide to facilitate higher speed service to residences and enterprises. Instead of copper cables, fibre is deployed to the neighborhood, the multi-dwelling unit or the residence, to increase bandwidth and improve the uploading and downloading files in both directions. The advantage of PON is that it provides high bandwidth without sensitivity to the distance between the central office and the subscriber. This technology is being deployed in Japan, China, Korea and the United States (“U.S.”).
Our solutions are used in equipment such as aggregation, multi-service provisioning platforms, routers and optical transport platforms that gather and process signals in different protocols, and then transmit them to the next destination as quickly and efficiently as possible. The next-generation networking equipment can efficiently handle different data protocols and is often referred to as “multi-service” because it can facilitate the transmission of Internet Protocol (“IP”) packets and Time-Division Multiplexing (“TDM”) signals over optical fibre. We are developing complex architectural silicon solutions to help our customers manage the increasing level of diverse traffic in the Wide Area Network to handle voice, video and data services. The Wide Area Network also involves the termination and distribution of separate higher speed data signals into lower speed data signals. Many of our devices that are used in wireline communications equipment can also be deployed in the backhaul transport of wireless data from base station transceivers and base station controllers.
Our products and solutions in the Enterprise Infrastructure market enable the high-speed interconnection of the servers, switches and storage devices that comprise these systems thus allowing large quantities of data to be stored, managed and moved securely. Our focus in this area is developing interconnect devices and controllers for Fibre Channel, Serial Attached SCSI (“SAS”) and Serial ATA (“SATA”). We are shipping next-generation solutions for 8 Gbps Fibre Channel controllers for high-performance storage systems in the Storage Area Network (“SAN”) and Network Attached Storage (“NAS”) markets, as well as 6 Gbps SAS/SATA controllers and expanders for this market. PMC-Sierra has also developed semiconductor and adaptor solutions for the 6 Gbps server-attached storage market.
In another part of the Enterprise Infrastructure market, PMC provides integrated solutions for laser printers, switches and routers that are used by enterprises and small businesses to manage their data on an inter-office and intra-office basis. In the laser printer market, we sell our standalone microprocessors and integrated system-on-chip devices primarily into the mid-to high-end and multi-function segments of that market. We also have applications for network-attached storage for small and medium sized businesses.
Most of our semiconductors can be divided into broadly defined functional categories as identified below. As with descriptions of the network, particular categories may overlap and a device may be present in more than one category. In addition, some products may integrate several different functions and therefore could be classified in one or more categories. For example, some of our products convert high-speed analog signals (“wired” or “wirelessly”) to digital signals and split or combine various transmission signals.
Controllers: rapid growth in data storage is driving a need for more cost-effective and larger capacity storage systems. Controller products based on Fibre Channel, SAS and SATA enable the development of external and server-attached storage systems that meet the cost and capacity requirements of our customers.
Framers and mappers: before data can be sent to the next destination, it must be converted into a proper format for transmission in the network. For example, the framing function arranges the bits into different size formats, commonly referred to as “cell” or “packet” formats, and attaches the appropriate information to the formats to ensure they reach their destinations. In turn, this data may be inserted into other frames, such as SONET/SDH frames, for transmission across high-speed fibre optic networks.
Line interface units: these devices, also referred to as transceivers, transmit and receive signals over a physical medium such as wire, cable or fibre. The line interface unit determines the speed and timing characteristics of the signals, and may also convert them from a serial stream of data into a parallel stream before they are further processed for transmission to the next destination.
Microprocessor-based System-On-Chips (“SOCs”): these devices perform the high-speed computations that help identify and control the flow of signals and data in many different types of networking equipment used in the communications, storage and enterprise markets. With greater demand for integration of features and functions on a single device, more highly-integrated system-on-chip solutions are being developed.
Packet and cell processors: these devices examine the contents of cells, or packets, and perform various management and reporting functions. For instance, a switch or router may use a packet or cell processor to determine if a signal is voice or video in order to allocate the proper amount of bandwidth for transmission.
Radio Frequency (“RF”) transceivers: the rapid growth of mobile and nomadic data services is accelerating the need for higher bandwidth RF transceivers (a.k.a. radios). These radios transmit and receive broadband signals over the air using Orthogonal Frequency-Division Multiple Access (“OFDMA”) based protocols and Multiple-Input-Multiple-Output (“MIMO”) antenna technology.
Serializers/Deserializers: these devices convert and multiplex traffic between slower speed parallel streams and higher speed serial streams. Original Equipment Manufacturers (“OEMs”) use serial streams to reduce networking equipment line connections and parallel streams to allow them to apply lower cost traffic management technologies.