Q&A with Cisco CEO Chuck Robbins about its new business line - standalone networking chips to win big datacenter clients like Facebook and Microsoft
Cisco is best known for selling routers and switches, but now the networking giant is expanding into the highly-competitive business of selling computer chips.
Context & Ripple Effects
By late 2019, Chuck Robbins had spent four years repositioning Cisco away from pure hardware: after his surprise appointment as CEO in 2015 and a 2016 engineering reorg that split the company into networking, cloud, security, applications and IoT teams, he told CRN that software and services would reach 30% of revenue within three years. Selling standalone networking chips to hyperscalers like Facebook and Microsoft extends that same logic one layer down — monetizing Cisco's silicon even when customers don't buy Cisco boxes.
The move reads differently with hindsight: the related coverage shows Cisco doubling down on this bet through the AI buildout, first with a new switch generation promising 10x performance for AI networks in 2025, then with the Silicon One G300 on TSMC's 3nm process aimed squarely at Broadcom and Nvidia. The 2019 decision to sell chips separately is the opening move of that arc.
First-order effects
- Facebook and Microsoft gain a new supplier option: they can now buy Cisco's networking silicon as components instead of being locked into whole Cisco routers and switches for their datacenters.
Second-order effects
- Merchant chip incumbents like Broadcom face a competitor with a systems company's R&D behind it, while Cisco's own box business absorbs the tension of arming customers who might otherwise have bought complete systems.
Third-order effects
- If the pattern holds through the AI infrastructure race — as the G300 challenge to Broadcom and Nvidia suggests it has — network value migrates from finished systems to the silicon itself, turning Cisco into a merchant chip vendor whose switch business competes on price against its own products.
The trend: Networking vendors are unbundling their chips from their own systems to sell merchant silicon directly to hyperscalers, a shift the AI buildout has accelerated.