Exar this week announced that it plans to acquire Neterion, which specializes in 10 Gigabit Ethernet (10GbE) adapters for virtualized environments, servers and storage devices. The deal is expected to close next month at an estimated purchase price of $10 million to $11 million.

Last year, Exar acquired Hifn, which specializes in silicon and boards for hardware-accelerated data compression, encryption and deduplication.

“We see a lot of synergy between Neterion’s virtual I/O technology and Hifn’s data compression, security [encryption] and data deduplication technologies,” says John Williams, vice president of Exar’s datacom and storage business. “We’re targeting the virtualized, converged data center with our data communications and storage products.”

Exar is known primarily as a semiconductor supplier to the video, imaging and communications markets, but is in the process of re-positioning itself as a supplier of solutions for the converged data center. The company has about 550 employees and annual revenues in the $136 million range.

The acquisition of Neterion will put Exar in direct competition with 10GbE adapter heavyweights Broadcom and Intel and, when Neterion’s converged network adapters (CNAs) are fully baked, with vendors such as Emulex, QLogic and Brocade. Neterion’s Ethernet adapters support Fibre Channel over Ethernet (FCoE) and iSCSI primarily in software, and do not support those protocols onboard in hardware. According to John Hagerman, Neterion’s vice president of sales and business development, the adapters will fully support FCoE and iSCSI in hardware in the next generation of the products.

Neterion’s 10GbE adapters include the X3100 series and Xframe V-NIC series. The company’s OEMs include EMC, Hewlett-Packard, IBM, Fujitsu’s server unit, and Hitachi’s blade server unit.

In addition to Hifn, Exar acquired Galazer Networks last year.

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