Global Networking and Security-As-A-Service Provider Standardizes on Silicom's Next-Gen Edge Devices

Rhea-AI Summary

Silicom (NASDAQ: SILC) has secured a significant Design Win from a global networking and security-as-a-service leader, becoming their exclusive Edge Networking hardware provider. The deal, which emerged from discussions initiated a year ago, is expected to generate $3-4 million in annual revenue by 2026. The agreement includes several products, notably Silicom's newest Edge Networking solutions pre-integrated with Network Interface Cards.

Initial deliveries are scheduled to begin in the second half of 2025. The standardization of Silicom's Edge devices across all Edge deployment scenarios positions the company for additional Design Wins that could significantly boost annual sales. This development validates Silicom's renewed sales strategy and broad product portfolio.

Positive

• Secured exclusive provider status for Edge Networking hardware
• Expected revenue of $3-4 million annually by 2026
• Potential for additional Design Wins with significant revenue impact
• Standardization across all customer's Edge deployment scenarios

Negative

• Revenue impact won't materialize until second half of 2025
• Full revenue run rate not expected until 2026

Insights

Financial Analyst

This design win represents a significant milestone for Silicom, demonstrating successful market penetration in the edge networking space. The $3-4 million annual revenue projection at full run rate is substantial, representing approximately 4-5% of the company's current market cap. The standardization agreement as sole edge networking hardware provider is particularly valuable, creating a strong moat and recurring revenue stream. Most importantly, the potential for additional design wins could multiply this initial revenue several times over. The delayed revenue recognition starting H2 2025 and full ramp-up in 2026 suggests a long-term growth catalyst rather than immediate financial impact. The strategic importance of becoming a standardized supplier for a global networking leader outweighs the initial revenue figures, as it validates Silicom's technology and market position.

Tech Industry Analyst

The standardization agreement is a strategic coup in the competitive edge networking market. By becoming the sole provider for all edge deployment scenarios, Silicom has secured a powerful position in the customer's infrastructure ecosystem. This type of vendor lock-in is particularly valuable in edge computing, where standardization and reliability are crucial. The pre-integration of Network Interface Cards with edge networking solutions shows Silicom's technical capability to deliver complete, optimized solutions. The year-long evaluation process leading to standardization indicates the customer's thorough technical validation, suggesting strong product-market fit and reduced risk of displacement by competitors. This win could serve as a reference case for other potential enterprise customers in the networking-as-a-service space.

-   Current Design Win expected to reach $3-$4M/yr at full run rate,
leading to additional significant Design Wins in the future -

KFAR SAVA, Israel, Dec. 11, 2024 /PRNewswire/ -- Silicom Ltd. (NASDAQ: SILC), a leading provider of networking and data infrastructure solutions, today announced that a global networking and security-as-a-service leader has awarded Silicom a first Design Win and standardized on Silicom Edge devices for all of its Edge deployment scenarios. This makes Silicom the customer's sole Edge Networking hardware provider, paving the way for additional Design Wins that could add multiple millions to the Company's annual sales.

This Design Win represents the successful conclusion of a process which began a year ago, when the networking giant initiated discussions about one of Silicom's products. Over time, the discussions expanded to more products and use cases, leading to this significant Design Win with the potential for additional Design Wins in the future.

This first Design Win encompasses several products, including several of Silicom's newest Edge Networking solutions pre-integrated with Silicom's Network Interface Cards. The fact that Silicom can address all of the Edge Networking needs of this vast customer confirms the value of our broad portfolio and the strength of our offerings. Initial deliveries are expected to begin in the second half of 2025, with revenues related to this first win ramping to $3-$4 million per year in 2026 and beyond.

"The relationship we have built with this networking leader, with initial discussions leading step by step to their standardization on our products and the potential for future collaborations, confirms that our renewed sales strategy is working," commented Liron Eizenman, Silicom's CEO. "It shows the value of the range of our products, the innovation of our concepts, and the rock-solid reliability of our delivery.

"Relationships such as these, based on deep trust and slow-but-steady growth, are the platform of our Strategic Plan. They are helping us build a strong base of recurring revenues and a fertile opportunity pipeline that will serve as a platform for continuous growth in our revenues and profits, creating significant value for our shareholders."

About Silicom

Silicom Ltd. is an industry-leading provider of high-performance networking and data infrastructure solutions. Designed primarily to improve performance and efficiency in Cloud and Data Center environments, Silicom's solutions increase throughput, decrease latency and boost the performance of servers and networking appliances, the infrastructure backbone that enables advanced Cloud architectures and leading technologies like NFV, SD-WAN and Cyber Security. Our innovative solutions for high-density networking, high-speed fabric switching, offloading and acceleration, which utilize a range of cutting-edge silicon technologies as well as FPGA-based solutions, are ideal for scaling-up and scaling-out cloud infrastructures.

Silicom products are used by major Cloud players, service providers, telcos and OEMs as components of their infrastructure offerings, including both add-on adapters in the Data Center and stand-alone virtualized/universal CPE devices at the edge.

Silicom's long-term, trusted relationships with more than 200 customers throughout the world, its more than 400 active Design Wins and more than 300 product SKUs have made Silicom a "go-to" connectivity/performance partner of choice for technology leaders around the globe.

For more information, please visit: www.silicom.co.il

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, Silicom's increasing dependence for substantial revenue growth on a limited number of customers, the speed and extent to which Silicom's solutions are adopted by the relevant markets, difficulty in commercializing and marketing of Silicom's products and services, maintaining and protecting brand recognition, protection of intellectual property, competition, disruptions to its manufacturing, sales & marketing, development and customer support activities, the impact of the wars in Gaza and in the Ukraine, attacks on shipping by Huthis in the Red Sea, rising inflation, rising interest rates and volatile exchange rates, as well as any continuing or new effects resulting from the COVID-19 pandemic, and  the global economic uncertainty, which may impact customer demand by encouraging them to exercise greater caution and selectivity with their short-term IT investment plans. The factors noted above are not exhaustive.

Further information about the company's businesses, including information about factors that could materially affect Silicom's results of operations and financial condition, are discussed in our Annual Report on Form 20-F and other documents filed by the Company and that may be subsequently filed by the company from time to time with the SEC. These forward-looking statements can generally be identified as such because the context of the statement will include words such as "expect," "should," "believe," "anticipate" or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. In light of significant risks and uncertainties inherent in forward-looking statements, the inclusion of such statements should not be regarded as a representation by the company that it will achieve such forward-looking statements. The company disclaims any duty to update such statements, whether as a result of new information, future events, or otherwise.

Company Contact: Eran Gilad, CFO Silicom Ltd.         Tel: +972-9-764-4555       E-mail: erang@silicom.co.il

Investor Relations Contact: Ehud Helft EK Global Investor Relations Tel: +1 212 378 8040 E-mail: silicom@ekgir.com

 

Logo - https://mma.prnewswire.com/media/733229/Silicom_Ltd_Logo.jpg

 

View original content:https://www.prnewswire.com/news-releases/global-networking-and-security-as-a-service-provider-standardizes-on-silicoms-next-gen-edge-devices-302328955.html

SOURCE Silicom Ltd.

FAQ

What is the expected annual revenue from Silicom's (SILC) new Design Win?

The Design Win is expected to generate $3-4 million in annual revenue at full run rate by 2026.

When will Silicom (SILC) begin deliveries for the new Edge Networking contract?

Initial deliveries are scheduled to begin in the second half of 2025.

What products are included in Silicom's (SILC) latest Design Win?

The Design Win includes several products, including Silicom's newest Edge Networking solutions pre-integrated with Network Interface Cards.

How will the Design Win affect Silicom's (SILC) market position?

The Design Win establishes Silicom as the exclusive Edge Networking hardware provider for the customer, potentially leading to additional significant Design Wins in the future.

What is the timeline for Silicom's (SILC) revenue ramp-up from the new Design Win?

Revenue will begin in the second half of 2025 and is expected to reach full run rate of $3-4 million annually in 2026 and beyond.