Applied Micro Circuits (AMCC) has bought Canadian-based chip-maker Quake Technologies in an attempt to move into the Ethernet market.

Quake designs chips for 10-Gigabit Ethernet equipment, as well as carrier lines. AMCC is a major vendor of chips for more traditional carrier equipment. It expects the US$69 million all-cash deal to open up opportunities in gear for both enterprise and service-provider networks, according to AMCC chief technology officer Subhash Roy.

Although 10-Gigabit Ethernet has been shipping since 2001, it is still a tiny fraction of the Ethernet market because of its high price, according to Dell'Oro Group analyst Seamus Crehan.

But he expects the market to grow rapidly from 500,000 ports this year to more than 9 million ports in 2010, even though it will be less than 5 percent of the total Ethernet market after it reaches that point.

Current users include carriers, research institutions and very large enterprises, but other users are likely to start upgrading from Gigabit Ethernet starting in about two years, he said.

Quake sells components for both copper and optical fiber 10-Gigabit Ethernet interfaces, Roy said. Enterprises are using the technology mostly for server-to-server links and storage connectivity in data centres, he said.

The buyout needs regulatory approval and is expected to close at the end of this month. Most Quake employees are expected to join AMCC, which already has a facility in Ottawa, Roy said.