It is certainly a big deal for HFT. Pulling the Solarflare networking technology into a Xilinx FPGA should cut a significant amount of latency for FPGA-based trading systems. Having a Solarflare IP core option should benefit other high-performance networking applications outside of HFT as well. Seems like a smart acquisition for Xilinx.

I doubt it. HFT is a shrinking industry. Solarflare implements their high end NICs using FPGAs, so they have deep expertise in FPGA implementations of network stuff, as well as integrating those implementations with the host OS (ie, writing drivers). My guess is they're interested in offerings related to what's commonly called "software defined networking": running multiple virtual networks over a single physical network, dynamic route optimization, load balancing, etc. This is a key building block of cloud computing, which is a fast growing industry. Implementing it in FPGA firmware instead of actual software makes a lot of sense, so I suspect Xilinx is planning to improve it's offerings in this area.

The absolute number of NICs needed by HFT is quite small, but they have enormous amounts to spend on customization, which can drive product development for others.

High speed, low latency and reconfigurable networking are areas that FPGAs are good at. They're already used widely for HFT.