Broadcom will pay US$178 million for privately held chipmaker Dune Networks. The purchase gives it control of a massively scalable chipset capable of simultaneously supporting more than 10,000 servers boasting 100Gbps ports. That in turn gives it a significant beachhead into the nascent cloud computing market after failing to snap up rival Emulex in a hostile takeover earlier this year.

“Dune’s massively scalable interconnect fabric, combined with our Ethernet products, augments our portfolio of solutions for data center networking equipment,” explained Broadcom network switching general manager Martin Lund. “This technology is particularly well suited to meet the emerging requirements for cloud computing networks at a large scale, and will enable us to address new market applications for Ethernet in the data center.”

Broadcom expects the purchase to add to earnings as early as next year. It plans to pay out nearly US$178 million in cash, with a minor portion for unvested Dune stock options granted via restricted Broadcom stock. Dune has raised US$53 million to develop data center switch fabric solutions.