What happened
Shares of Silicom (SILC +2.24%) have plunged today, down by 12% as of 12 p.m. EST, after the company announced a prominent customer had canceled a project that used Silicom products. The project had represented the company's largest design win ever.
So what
The customer, which Silicom describes as a "top-10 Cloud player," has chosen to abort a new cloud infrastructure architecture project that would have utilized Silicom's 100-Gigabit-Switch-Fabric-On-A-NIC product. Silicom is quick to point out that the decision was not the result of any fault on Silicom's part, saying its execution was "flawless." The decision to abort was "based on issues and challenges faced at a much higher level of the new Cloud architecture."
Image source: Getty Images.
Some of the orders were scheduled to be delivered in the first half of 2018, and Silicom says it is still evaluating the impact of the development on its financial results.
Now what
CEO Shaike Orbach said in a statement, "While we are obviously disappointed with the customer's decision, we are encouraged by the technological success of the highly complex product that we developed for them: a success which has generated significant admiration for Silicom within this giant customer and its Tier-1 server manufacturer partners. We hope to leverage this trust to address additional significant opportunities with both the customer and its partners."
Silicom reported fourth-quarter results in January, and has not yet announced when it will report first-quarter results, so it's unclear when investors will get more details regarding the impact.
