Cyber Security Leader Selects Silicom Edge System for its Next Generation Offering

Rhea-AI Summary

Silicom (NASDAQ: SILC) has secured a design win from a major US-based cyber security customer for an advanced Edge system. The customer projects reaching a full run-rate of approximately $2 million per year by the second half of 2025. The deal involves a customized version of Silicom's wireless connectivity-enabled Edge system with an integrated Network Interface Card.

The customer, which initially purchased network adapters from Silicom, has expanded its relationship to include complex Edge devices. The system will be implemented as the next generation of one of the customer's leading product lines. Discussions are ongoing regarding additional Silicom products for other product lines.

Positive

• Secured new design win expected to generate $2M annually starting H2 2025
• Expanded relationship with existing customer from basic components to complex Edge systems
• Potential for additional business through ongoing discussions about other product lines
• Growing recurring revenue base through long-term customer relationships

Negative

• Revenue impact won't materialize until second half of 2025

Insights

Financial Analyst

This $2M annual contract win represents a meaningful revenue stream for Silicom given its small market cap of $107M. The deal structure indicates smart business development - starting with network cards and expanding to higher-margin Edge systems showcases successful account penetration and upselling. The recurring revenue nature of this contract provides valuable predictability to future cash flows.

The H2 2025 ramp-up timeline gives clear visibility into revenue growth. While $2M may seem modest, it accounts for roughly 2% of market cap and demonstrates the company's ability to secure design wins with major US cybersecurity players. The customization capabilities and integrated product approach (Edge systems + NICs) suggest strong competitive advantages in a growing market segment.

The expanded relationship pattern here is particularly noteworthy - it validates Silicom's land-and-expand strategy and suggests potential for similar expansions across their customer base. The ongoing discussions about additional product lines indicate further upside potential beyond the announced contract value.

Technology Industry Analyst

The strategic significance of this win extends beyond immediate financials. The customer's evolution from buying basic network cards to adopting Silicom's advanced Edge systems for their next-gen product line validates Silicom's technology roadmap and R&D investments. The integration of wireless connectivity capabilities with Edge computing systems positions Silicom at the intersection of two major growth trends in enterprise networking.

The customization aspect is particularly telling - it suggests Silicom has developed the engineering flexibility and time-to-market capabilities that larger cybersecurity vendors value. This competitive advantage is difficult to replicate and typically leads to high switching costs once designed into a customer's product line.

The mention of "deep wireless know-how" signals Silicom's evolution beyond traditional networking hardware into more sophisticated wireless-enabled Edge solutions - a critical capability as enterprises increasingly demand integrated wireless + Edge computing solutions for modern security architectures.

- Customer forecasts full ramp-up to reach $2M/year –

KFAR SAVA, Israel, Jan. 13, 2025 /PRNewswire/ -- Silicom Ltd. (NASDAQ: SILC), a leading provider of networking and data infrastructure solutions, today announced that an existing customer, a major US-based cyber security company, has expanded its business with Silicom, awarding the Company a design win for an advanced Edge system. Initial orders have been received, and quantities are expected to ramp up during the second half of 2025 to reach a full run-rate of approximately $2 million per year.

The selected product is a customized version of a wireless connectivity-enabled Silicom Edge system incorporating a Silicom Network Interface Card. The customer will offer this system as the next generation of one of its leading product lines.

This win expands the relationship that Silicom has been building with the client for several years, ramping up the range of products sold from network interface cards to complex Edge devices. In parallel, discussions continue about additional Silicom products that the customer is considering for other product lines.

"The fact that a company that began buying network adapters now relies on us for its next-generation Edge and appliance needs demonstrates the strength of our product line and the importance of the relationships we have built over the years with our loyal customer base," commented Liron Eizenman, Silicom's CEO. "Our ability to carry out required customization quickly and to provide both the Edge system and the network interface card that are incorporated within the system, together with our deep wireless know-how, were also key factors in securing the win. We believe they will lead to additional business with this customer."

"Long-term, trusting relationships such as these are helping us to expand our base of recurring revenues. We expect demand to continue to build for our Edge systems, Smart Network Interface cards and innovative products that integrate the two, becoming a key driver of our future growth."

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

 

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SOURCE Silicom Ltd.

FAQ

What is the expected annual revenue from Silicom's (SILC) new Edge system design win?

The design win is expected to generate approximately $2 million in annual revenue at full ramp-up.

When will Silicom (SILC) reach full production volume for the new Edge system order?

Full production ramp-up is expected during the second half of 2025.

What products are included in Silicom's (SILC) new cyber security customer design win?

The design win includes a customized wireless connectivity-enabled Edge system incorporating a Silicom Network Interface Card.

How will the new Edge system design win affect Silicom's (SILC) recurring revenue?

The design win is expected to strengthen Silicom's recurring revenue base through a long-term customer relationship generating $2M annually.