Solarflare raises $26 million for networking chips

You can blame the popularity of YouTube for the success of Solarflare Communications. Because demand for internet video keeps on growing, the need for infrastructure to handle the growth is also on the rise.

Solarflare Communications has raised $26 million in venture capital for its high-speed networking chip business as part of an effort to create more energy-efficient data centers.

The Irvine, Calif.-based company is creating 10GBASE-T chips, which can transfer data at 10 gigabits a second over the Ethernet protocol. Such chips are used in servers and switches inside data centers to boost the transfer of data from one piece of hardware to another with the lowest power consumption.

The company is in a good spot because it is the first to capitalize on a generational shift in networking, as network speeds move from 1-gigabit-per-second to 10-gigabits, said Russell Stern, chief executive of Solarflare (pictured below).

The round includes previous investors such as Oak Investment Partners, Foundation Capital, Accel Partners and Amadeus Capital Partners. The round slightly exceeds the amount raised by rival chip company Aquantia, which raised $25 million in March.

Solarflare was started in 2001 as a chip design firm focused on 10-gigabit Ethernet networking. In 2006, it merged with Level 5 Networks in Cambridge, England. It started shipping a low-power 10GbE vNIC controller/MAC chip in February 2007.

Solarflare said it will use the new money to launch its next-generation products, including a low-power 10GBASE-T PHY. The company hopes to dominate 10-gigabit networking the way that Broadcom and Marvell have dominated 1-gigabit networking.

“The interesting thing about networking is that no player has dominated more than one generation of product,” Stern said.

The U.S. Environmental Protection Agency (EPA) reports that national energy consumption by servers and data centers could nearly double by 2011 to more than 100 billion kilowatt hours, representing a $7.4 billion annual electricity cost.

With technologies such as Solarflare’s networking chips, it becomes easier to shift data to outlying sites with greener energy sources, such as solar or wind power. The computing of data can happen at those locations in a more energy-efficient manner than inside a power-hungry data center, said Andy Hopper, a fellow at Corpus Christi College and head of the Computer Laboratory at the University of Cambridge, Cambridge, UK.

The latest investment brings the total amount raised by Solarflare (and its acquired entity, Level 5) to over $126 million in seven years. Solarflare’s partners include Accton, Citrix, Delta, Ixia, Panduit, SMC and VMware. The company has 125 employees.

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