Merchant Silicon is an marketing term used to describe the use of “off the shelf” chip components to create a networking product and commonly used by company that design their own silicon chips when explaining that their process is better and more efficient.
The networking industry has two types of silicon: ìcustom or in houseî or ìmerchant or off the shelfî. The ‘in house silicon’ argument goes something like this :
We have our specialist engineers who can custom design an ASIC and supporting chips that are completely focussed on the features needed to deliver Product X. As a result, our designs are purposefully built to be faster, better etc. Our prices are more expensive because our products are faster and more focussed and because our costs are higher.
The ‘merchant silicon’ argument goes something like this:
The levels of expertise required to design and build a silicon chip is very high. It requires specific skills, tools, and high levels of expertise. If your core business is producing a networking device, then having your own silicon development is not core business. By relying on companies who specialise in silicon design and manufacture, we can focus on software and integration to deliver new and better features at a cheaper price.