Chip test co Optimal Plus captures auto market

Dan Glotter Photo: Tamar Matsafi

CEO Dan Glotter: We already do the testing on 75% of chips for cars.

"Eventually, we'll take this market," declares Optimal Plus founder and CEO Dan Glotter, partly analyzing his company's business momentum and partly indulging in a little boasting. 13 years after it was founded, Holon-based Optimal Plus finds itself at one of most influential and interesting junctions in the global electronic industry at a period of rapid evolution in that industry. With a list of customers that includes large parts of the chip sector, Glotter is very enthusiastic about the company he founded and manages, but is also worried about the competition he now anticipates.

Optimal Plus tests and analyzes big data obtained from the chip production process. The company's systems record the information creating during testing, stream some of it to the cloud, analyzes it using artificial intelligence tools, and gives results back to the production floor within a fraction of a second. The insights generated by the system make it possible to weed out faulty components, correct production processes, and save the manufacturers a lot of money, and sometimes also embarrassment. In some sectors, such as the auto sector, detecting a faulty part is likely to save lives. With a volume of work now reaching tens of billions of electronic components annually, even a fraction of a percent of turnover means annual revenue in the tens of millions of dollars. Glotter is not disclosing figures, but does say that his company's growth is over 10% a year.

"Last year alone, we tested over 70 billion chips and boards. No other company in the world even comes close to this," Glotter tells "Globes." "I believe that we'll reach 100 billion by the end of this year or the beginning of next year. Right now, this is 25% of the global industry, but this proportion will increase. Already now, 75% of the chips for cars go through us, and I hope it will reach 100% in the coming years. In the world of fabless companies planning chips, we are dominant, and among independent device manufacturers (IDM), we're about 50%."

"Globes": What is your secret? Have you found a niche in which there are no strong competitors?

Glotter: "The simple explanation is that we were the first and we're taking advantage of that. We have developed a database that grows all the time, and it's really hard to go up against that. We have to be careful to avoid arrogance and not let it go to our heads, though. We're seeing more and more large public companies checking out our sector, and although we have developed many patents, that won't help us against them. Meanwhile, they're unsuccessful, but we won't be immune forever."

Optimal Plus's list of customers is currently composed of an impressive collection of chip manufacturers whose products operate computers, smartphones, servers, streamers, and smart loudspeakers. The list is only growing as the technology also penetrates more conventional sectors. Some of the most prominent are Qualcomm, NVIDIA, NXP, Marvell Technology Group, and Renesas Electronics, and there are also electronics companies that place the chips in their products. Optimal Plus is currently in discussions for an agreement with several global electronics giants - bitter rivals whose struggles between them appear regularly in headlines. If these deals are signed, Optimal Plus will get very close to Glotter's ambitious targets.

It is necessary to look at the market that Optimal Plus is aiming at in order to understand the scale involved. After several years of stagnation, the chip industry is taking off, largely due to market-shaking technologies like artificial intelligence (AI), Internet of Things, and autonomous vehicles. 2017 was a record year for the chip industry with an all-time record of $419 billion in revenue, far ahead of the forecasts. 2018 looks just as good. The autonomous vehicle segment alone is projected to reach $32 billion in revenue, with growth of over 10% for the third straight year. The AI chips market is likely to outstrip all of the other markets.

All of this is taking place in a sector undergoing business upheaval, with the last one standing being the winner. Freescale Semiconductor was acquired by NXP, Altera by Intel, Cavium by Marvell, and Intersil by Renesas. Broadcom tried to acquire Qualcomm at a company value of $120 billion in what could have been the merger of the century, but was stopped by an order signed by President Trump because of concern that control of the chips market would pass into Chinese hands. Competition is intense and companies are changing hands, but Optimal Plus wants to work with everybody, regardless of who the owners are.

Your customers are competing against each other. How can they be willing to grant you access to such confidential and sensitive information?

"We've built a wall between them and information doesn't pass through it. We've lost only one customer in 13 years (Broadcom, which wanted to save on costs when it was acquired by Avago). I think that says a lot."

Saving thousands of recalls for auto companies

Of all the chip technology areas, the auto chips field is currently the focus of Optimal Plus's interest. Electronic computer chips are found in every car produced today and the industry is at the center of the rise of electric and autonomous cars, as well as in developments relating to drones, trucks, submarines, military vehicles, communications between vehicles, automatic parking, etc. The market amounts to many billions of dollars, and forecasts for the coming decades reach the trillions of dollars. Optimal Plus believes that this prodigious growth will be its main growth engine.

The need to conduct careful tests of chips is becoming critical in the world of autonomous cars. It is enough to think about the feature referred to as adaptive cruise control, in which the car maintains a fixed speed in a lane, but if it detects a slow vehicle, it slows down and adjusts its speed. Adaptive cruise control, which is used in thousands of cars already traveling on the roads, is necessarily based on a chip. If the chip is defective, the car is liable to collide with the one ahead of it. "In electronics, it's customary to measure DPPM - defective parts per million. When autonomous cars are involved, what you need is defective parts per billion, and we're able to make this transition," Glotter says.

According to Optimal Plus, its technology detects 25% more malfunctions than its competitors. In the Audi A6, for example, there are 7,000 chips and electronic sensors. 4,000 new cars run off its production line daily, making 28 million electronic components. At a rate of one per million, it comes to 28 cars a day sold with malfunctions requiring an expensive recall from the company - bringing the back to a garage for repairs. For the sake of comparison, at BMW it is 54 cars a day. If Optimal Plus really saves them 25% of these costs, it comes to a really large amount of money.

The chips and electronic circuits that Optimal Plus tests reach most of the global auto industry. NVIDIA's chips, for example, are installed in Audi and Tesla cars, while Mobileye uses STM's chips. What this means is a certain sense is that Optimal Plus is responsible for the quality of electronics of Elon Musk and Amnon Shashua. On the other hand, Intel and Mobileye prefer independent testing of the chips that the company itself manufactures. It is obvious that this fact, spoils Glotter's mood and tempts him into undiplomatic comments.

"It's hard for companies that developed their own testing system to take it outside the company, but it's not their profession," he says. "We've made quite a few attempts to do business with Intel. They have between 600 and 1,000 engineers producing testing solutions, but they're significantly inferior to ours. It's just that they have an emotional connection, which is the reason for their high costs. I think that the product that they make is unusually good, but there's an unhealthy arrogance at Mobileye. You see this arrogance at Intel and how they missed the switch to 10 nanometers. It's a company that was at the forefront of the forefront, and due to excessive arrogance, they no longer have this culture there. It upsets me as a citizen more than as a former Intel employee."

Will Intel eventually switch to you?

"Definitely; there's no question about it. You see the trend. It's a fact that half of the industry is already working with us."

Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Dan Glotter Photo: Tamar Matsafi
Dan Glotter Photo: Tamar Matsafi
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