Partners: Leaba Semiconductor Acquisition Gives Cisco Competitive Edge In R&D

Cisco Systems' acquisition tear is rolling on as the networking giant unveiled its plan to purchase little known Israel-based networking chip designer Leaba Semiconductor for $320 million in cash and incentives.

"Software and advanced chips are areas where owning the technology gives you a better competitive positioning because you can tailor the R&D and development cycles to align with your specific strategic roadmap," said David Powell, vice president of TekLinks, a Birmingham, Ala.-based Cisco Gold partner. "As more logic goes into the switching environment to support things like [Cisco] ACI, having their own chip will allow them to adapt and adjust and innovate quickly. It seems like a great acquisition to me."

Leaba is a fabless semiconductor company that's currently operating in stealth mode and providing innovative solutions for infrastructure challenges, according to their website.

[Related: Cisco Snapping Up CliQr For $260 Million To Better Manage Hybrid Clouds]

Powell said Cisco has done several similar acquisitions in the past when, instead of doing internal R&D, they acquire the technology from another company.

"It's a great approach," said Powell. "Cisco has been making acquisitions that allow them to more strategically address the changes in the market."

Leaba's CEO, Eyal Dagan, and CTO Ofer Iny, were both former top executives at Broadcom, according to their LinkedIn profiles.

The Leaba announcement was made during Cisco's Partner Summit 2016 in San Diego. Cisco did not indicate when the deal would close.

"We are hearing a lot at Partner Summit about the speed of change," said Kent MacDonald, vice president of converged infrastructure and network services at Long View Systems, a Calgary, Alberta-based solution provider, and also a Cisco Gold partner. "Adding depth and diversity to Cisco's ASIC line up should again add to Cisco's ability to lead the market … Great to see [Cisco CEO] Chuck [Robbins] continue to keep his foot on the innovation."

Cisco says Leaba, a venture-backed company, will accelerate its innovation strategy and give products even more differentiation in the market, said Rob Salvango, Cisco's vice president of corporate business development, in a blog post Wednesday.

"By combining Leaba’s semiconductor expertise with the Cisco engineering team, we will accelerate our plans for Cisco’s next-generation product portfolio and bring new capabilities to the market faster," Salvango wrote.

The Leaba acquisition comes just one day after the San Jose, Calif.-based networking leader unveiled plans to acquire cloud management startup CliQr for $260 million.

Cisco says CliQr will accelerate hybrid cloud adoption and bolster its own software-defined networking, which provides channel partners with data center orchestration technology to manage public, private and hybrid clouds, and move workloads between them.

Under the terms of the Leaba agreement, Cisco will pay $320 million in cash and assumed equity awards, plus retention-based incentives.

Leaba's team will report to Cisco's Core Hardware Group, led by Ravi Cherukuri, senior vice president of the hardware group.