Chip Express today announced that it has secured $12 million in additional financing from investment firms and corporate partners.
The company said that the funding will be used for R&D investments in the company's late-stage programmable application-specific integrated circuit (structured ASICs) technology.
The company also announced that it has changed its name to ChipX "in order to more strongly identify with the structured ASIC market".
Structured ASIC devices use pre-diffused transistors and metal layers to implement logic cells, memory, and I/O common to many chip designs. Custom logic for a specific application is then implemented in the final few layers of metal, requiring far fewer mask layers for each design. The company said that its technology consolidates wafer production tooling, reduces time-to-market and minimizes the cost of initial production.
"There is a direct correlation between shrinking silicon geometries and the benefits of using structured ASIC technology to shorten prototyping and reduce non-recuring expense costs," said ChipX president and CEO Amnon Fisher. "As line widths decrease, mask costs and design complexity increase exponentially, forcing OEMs to look for new methods for high-performance ASIC design. We are uniquely positioned to take advantage of these market trends."
The funding round was led by a new investor, VantagePoint Venture Partners, and included former investors Elron Electronic Industries, Ltd. (Nasdaq:ELRN), Wasserstein Venture Capital, UMC (NYSE:UMC), Needham Capital Partners, Newlight Associates, Parker Price Venture Capital, and Insite Capital.
Doron Birger, president and CEO of Elron, has been appointed chairman of the ChipX board of directors, replacing founding chairman Uzia Galil, who has stepped down. Melissa Crane Guzy, managing director of VantagePoint Venture Partners, also joins the ChipX board as a new director.
Headquartered in Santa Clara, CA, ChipX is a privately held corporation, founded in the U.S. in 1989. A subsidiary, ChipX (Israel) Ltd., performs research and development.
It is unclear at what company value the money was raised, but it should be kept in mind that Chip Express raised quite a bit of money before today. Although the company has already been kept by venture capital funds for 15 years, its revenue still has not passed the $20 million mark, nor is it known when the company will reach that level of revenue.
Market sources say that one of Chip Express’s main advantages is that is very quick at developing prototypes of application specific integrated circuit (ASIC) chips. The problem is that the market now has families of components called field programmable gate arrays (FPGA). These are standard components that can be bought off the shelf. They make it possible to carry out any idea for an ASIC application, and therefore compete directly with Chip Express’s chips.
This field has caught on very strongly around the world over the past 20 years. Xilinx (Nasdaq: XLNX) and Altera (Nasdaq: ALTR), the leaders in the FPGA field, each have annual sales of $1 billion, while Chip Express has not yet reached $20 million, which raises a real question about the company’s future.
Birger says, “ASIC is indeed divided into FPGA and standard sale chips. FPGA chips are suitable for production in small quantities, at a very high per-unit price, and their performance is poor. The advantages of FPGA chips are very quick supply and low development costs. Standard sale chips are suitable for production in very large quantities hundreds of thousands of units at a low per unit price, with good performance. The disadvantages are very high initial development costs and very long supply times.
”Chip Express’s ships are in between these two types. Supply times are short and development costs are very low. Per unit development costs are only slightly higher than for standard sale components, with comparable performance. The solution is suitable for manufacturers making chips in quantities of up to several hundred thousand units. That includes a very large proportion of the market, and it’s growing, as chip miniaturization progresses.
”VantagePoint invested in the company because of its unique positioning in the structured ASIC market. The advantages of Chip Express’s chips will become more significant with manufacturing technology of 0.13 microns and less.”
”Globes”: Is the company planning an IPO soon?
Birger: ”Not in the next year. Before we hold an IPO, we want to make a profit, and achieve substantial sales.”
How did you make contact with VantagePoint?
”VantagePoint approached us, after examining the semiconductor field. We took no steps to raise money.”
What are you planning next?
”The company now has enough cash to continue forward. Furthermore, the company recruited, who is very experienced, as CEO several months ago. We hope that with the new CEO, and its unique positioning as the leader in the growing structured ASIC market, Chip Express will become one of the Elron’s successful subsidiaries.”
Fisher has scored many successes in the semiconductor field. Among other things, he was CEO of Genesis Microchip (Nasdaq: GNSS), which he brought to an IPO.
Published by Globes [online] - www.globes.co.il - on March 22, 2004