Agere Systems Announces World's Fastest Switching Chip

ALLENTOWN, Pa., Oct. 21 /PRNewswire/ -- Agere Systems (NYSE: AGR.A, AGR.B) today announced the world's fastest switching chip that has the potential to revolutionize the economics, size, and multi-service performance and flexibility of communications network infrastructure equipment and consumer electronics devices for the next several years.

The groundbreaking chip switches voice, data, and video signals at least four times faster than all other competing single chip switches. China-based Zhongxing Telecom Equipment Corporation (ZTE) -- the largest listed telecommunications equipment manufacturer in China* -- is designing in Agere's chip for use in its multi-service switching equipment platform.

Switching chips are the engines that drive the vast majority of communications equipment, moving voice telephone calls, wireless Internet data, video streaming files, and other types of communications signals through network systems. Agere is the world's number one suppler of switching chips**.

Agere's chip, called the Protocol Independent Stand-Alone Switch (PI- 40SAX), is a key engine driving an important shift in the communications equipment industry to a lower cost structure. For the next several years, the industry's equipment will have to be much more reliable, much smaller, offer many more services, and still deliver much higher capacity and speeds-and cost much less.

"The PI-40SAX -- the third evolution of Agere's switching chip product line -- will empower telecom original equipment manufacturers of the world to revolutionize the way carriers look at their equipment and could very well be the catalyst needed to help telecommunications service providers to finally return to profitability," Eric Mantion, an analyst with In-Stat/MDR. "Agere's PI-40SAX switch chip is an outstanding device targeted at the markets that have been most resistant to the economic downturn, such as pedestal digital subscriber line access multiplexer systems, wireless infrastructure equipment, and storage area network systems. In the end, Agere's new multi-service chip is a strong foundational product from which customers can build today yet still use for years to come."

Agere's chip switches voice, data, and video signals at an aggregated switching speed of 80 Gigabits per second (Gbits/s). An aggregated speed of 80 Gbits/s guarantees a minimum of 40 Gbits/s of speed and bandwidth for current and future applications by users of switched voice, data, and video services-four times faster than the nearest competing single chip offering. This is achieved using Agere's patented scheduling technology, which times and sets priorities for individual traffic types the chip supports.

Agere's competitors can only achieve this equivalent of 40 Gbits/s input speed using three or more chips. This dramatic three-to-one or better chip reduction slashes communications equipment switching costs for Agere's customers by nearly 70 percent.

Agere's chip can provide guaranteed bandwidth for prioritized services and efficient use of switch capacity for all multi-service applications. The chip switches and isolates customer voice, data, and video at minimum rates of 40 Gbits/s. The chip enables a telecommunications network to simultaneously switch 320,000 voice and data calls -- eight times as many as the industry's state-of-the-art Class 5 switching equipment. Put another way, the chip has roughly enough bandwidth to handle the voice and data telecommunications switching needs of the entire population of people living in the cities of Pittsburgh, Pennsylvania *** or Haikou, China****.

"This new Agere chip opens doors to much more attractive cost models for equipment and service providers aimed at jumpstarting the communications industry back to its feet and running at a faster pace again," said Mr. Ma Hong Bing, chief technology officer with ZTE's Networking Division. "There is no doubt about the fact that this chip takes multi-service switching to new and unprecedented levels of performance and cost reduction."

The switching chip market amounted to approximately $325 million in 2002 and is expected to grow to $915 million by 2006, according to CIBC World Markets, a market research firm. Protocol-independent switching chips can be sold into more than a dozen different target markets.

Agere's innovative chip enables higher capacity and less expensive delivery of multiple broadband services using current and future equipment transmission standards. These include higher-speed, lower cost, and more intelligent digital subscriber line (DSL), third-generation (3G) wireless data, and streaming multimedia services.

"Shrinks Equipment From Size of Refrigerator to Pizza Box"

"This multi-service chip shrinks the size of today's refrigerator-sized switching equipment down to the size of a pizza box," said Mark Pinto, vice president and general manager of Agere's Processing, Aggregation, and Switching Division. "That shrinkage enables telecom service providers to squeeze much more capacity into much smaller amounts of space, thereby dramatically reducing real estate, power, and operational costs. The flexible chip resolves issues of paramount concern to communications equipment makers and service providers in this tough economic environment-how to dramatically lower switching and system costs while increasing system capacity, increasing service offerings, and minimizing future investment costs."

The single chip also offers multiple technology protocol benefits. For example, the chip can handle Time Division Multiplex (TDM) bytes, Asynchronous Transfer Mode (ATM) cells, and Internet Protocol (IP) packets. TDM, ATM, and IP are the three major technologies used to transport information through communications equipment.

The significance of this capability is that manufacturers can use this chip for their current equipment, as well as upgraded equipment they deploy in the future, without having to invest in changing the chip architecture as various transport technologies such as TDM, ATM, and IP evolve and get deployed in equipment.

This scalable feature translates to lower overall switching electronics and equipment costs, simplified and faster equipment upgrades, and accelerated product deliveries. Already available to customers, Agere's chip is targeted for use in various types of wireline and wireless communications equipment, including digital subscriber line access multiplexers (DSLAMs), radio network controllers, routers, and multi-service platforms. Agere is specifically targeting the enterprise, metro, access, and core transport market segments where these types of equipment are deployed. Protocol independent chips can be sold into more than a dozen different markets.

"Lowest Cost Switching Fabric On the Market"

The PI-40SAX is the newest and highest performance chip of Agere's family of PI-40 chips. The family includes Agere's PI-40X and PI-40C multi-stage switching chips announced earlier this year. By designing in Agere's PI-40SAX offering with its PI-40X and PI-40C chips, Agere's customers have an inherent solution that will give them the high capacity and prioritized quality of service, such as priority scheduling, bandwidth provisioning, and traffic isolation. In effect, Agere offers its customers the ability to collapse its multi-service, networks down to one chip architecture and platform for current and future requirements.

"When bundling its PI-40SAX device with the company's PI-40X and PI-40C devices, Agere offers the lowest cost, multi-service switching chip fabric on the market," said Mantion of In-Stat.

Agere's new chip also integrates multiple SerDes (serial izer/deserializer) input/output intercon nect sub-circuits that can transmit data into and out of the chip at up to 2.5 Gbits/s for each of the 32 SerDes sub-circuit links to the chip. Integration of the SerDes functions further reduces system costs by incorporating backplane transceivers. The PI-40SAX uses a transmission standard encoding scheme that is nearly 20 percent more efficient than 8 Bit/10 Bit line encoding schemes used by competing chip manufacturers.

The new PI-40SAX chip integrates and handles traffic from various numbers of links entering and exiting the chip at speeds from 622 megabits per second to 10 Gbits/s (OC-192), or any combination of these rates. This PI-40SAX chip amounts to a 40 Gigabit per second pipe that Agere's customers can carve up any way they want, no matter what speed or number of links used. Agere's customers don't have to worry about the selection of switching and interconnect technologies; the PI-40SAX solves that problem. They can focus on developing value-added features for other parts of their equipment systems.

Agere's chip is priced at $520 in production quantities of 10,000.

For more product information, customers may call the Agere Systems Customer Response Center, 1-800-372-2447, Dept. A65 (in Canada, 1-800-553- 2448, Dept. A65, fax number 1-610-712-4106, especially for callers outside of North America) or write to Agere Systems, Room 10A-301C, 1110 American Parkway NE, Lehigh Valley Central Campus, Allentown, Pa. 18109. Customers may also go to the following web site: http://www.agere.com/micro/his or email: docmaster@agere.com .

Agere Systems is a premier provider of advanced integrated circuit solutions that access, move and store network information. Agere's access portfolio enables seamless network access and Internet connectivity through its industry-leading WiFi/802.11 solutions for wireless LANs and computing applications, as well as its GPRS offering for data-capable cellular phones. The company also provides custom and standard multi-service networking solutions, such as broadband Ethernet-over-SONET/SDH components and wireless infrastructure chips, to move information across metro, access and enterprise networks. Agere is the market leader in providing integrated circuits such as read-channel chips, preamplifiers and system-on-a-chip solutions for high- density storage applications. Agere's customers include the leading PC manufacturers, wireless terminal providers, network equipment suppliers and hard-disk drive providers. More information about Agere Systems is available from its Web site at http://www.agere.com .

Agere's Forward-Looking Statements

This release contains forward-looking statements based on information available to Agere as of the date hereof. Agere's actual results could differ materially from the results stated or implied by such forward-looking statements due to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to customer demand for our products and services, control of costs and expenses, timely completion of employment reductions and other restructuring and consolidation activities, price and product competition, keeping pace with technological change, dependence on new product development, reliance on major customers and suppliers, availability of manufacturing capacity, components and materials, general industry and market conditions and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. For a further discussion of these and other risks and uncertainties, see our annual report on Form 10-K for the fiscal year ended September 30, 2001, and report on Form 10-Q for the period ending March 31, 2002. Agere disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    *    Digital Commercial Times Magazine

    **   Ryan, Hankin, and Kent: "Switching and Routing Semiconductors Weather
         the Downturn in 2001 and Prepare to Turn the Corner" (February 2002)

    ***  United States Census Bureau, U.S. Department of Commerce, Year
          2000 (Estimated population of Pittsburgh, Pa.: 334,563)

    **** WorldNews.com (Year 2000) (Estimated population of Haikou, China:
         328,199)

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