( Cisco announcement of CRS-3 router news and acquisition strategy included in this update.)

NEW YORK ( TheStreet) -- Netlist ( NLST) shares surged on speculation the memory module maker's technology is featured in Cisco Systems' ( CSCO) new router system, which it promises will usher in the next generation of the Internet.

Netlist shares surged higher after Briefing.com made note of a rumor that the company may be involved in Cisco's new CRS-3 router, which the company claims will offer more than 12 times the Internet speed and capacity of its nearest competitor.

In an accompanying press release, Cisco said the increased capacity of the CRS-3 enables the entire printed collection of the Library of Congress to be downloaded in just over one second; every man, woman and child in China to make a video call, simultaneously; and every motion picture ever created to be streamed in less than four minutes.

Cisco's press release made no mention of Netlist or its custom memory modules. Netlist and Cisco did not immediately respond to TheStreet's separate requests for comment.

In November, Netlist unveiled HyperCloud as a computer module that takes memory chips and makes them perform faster, consume less power, and create higher capacity in computer servers.

"A lot of the search applications are memory intensive, like YouTube downloading. That's all driven off of DRAM memory, as opposed to the hard drive," Netlist CEO Chuck Hong told TheStreet in a recent interview. " Customers need high-density memory at the lowest cost possible. They want that memory to run fast with low power. And that's what our product does."

If Cisco indeed chose to use Netlist's HyperCloud module, it would be a change in the network-equipment maker's strategy, which usually calls for the acquisition of smaller tech shops. In 2007, Cisco made 12 separate acquisitions and another five buys in 2008, although the pace has slowed considerably. Cisco made only three purchases in 2009, the last being ScanSafe in October.

Still, Netlist shares held onto most of their gains. The stock touched an intraday high of $5.10 before paring gains. Netlist was lately up 64 cents, or 15.3%, to $4.85. Volume topped 5.6 million shares by 11:45 a.m. EST, compared to the 50-day average daily volume of 1.23 million, according to the Nasdaq.

-- Written by Robert Holmes in Boston.

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