EZchip Slumps on Concern Cisco’s Processor to Rival Chips

EZchip Semiconductor Ltd. tumbled to a four-month low in New York on concern Cisco Systems Inc. will develop the Israeli chipmaker’s technology in-house, reducing revenue growth.

Shares of the Yokneam, Israel-based company slumped 22 percent to $23.99 at 10:52 a.m. in New York, with trading volumes 21 times the daily average over the past 90 days.

Cisco, the biggest maker of networking equipment, said today that it will develop its own nPower integrated network processor. EZchip received about 40 percent of its revenue from Cisco, according to data compiled by Bloomberg. The product will compete with EZchip’s product, said Jay Srivatsa, an analyst Chardan Capital Markets LLC.

Cisco’s processor “looks to compete with EZchip’s own solution,” Srivatsa said by phone from New York today. “The reality is that the platform for Cisco’s next-generation solutions incorporate EZchip’s products. However, it could affect products down the line.”