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Snubbed at home, chip startups pursue options in Asia

Posted: 14 Oct 2002 ?? ?Print Version ?Bookmark and Share

Keywords:consumer electronics? Cicada Semiconductor? Marvell Semiconductor? Broadcom? Intel?

Participants at the Silicon Hills Summit heard some good yarns here this week, tales of gold and opportunities galore in those hills just over yonder. Many of the opportunities are centered in Taiwan, mainland China, India and other distant points eager for new telecommunication and consumer electronics technologies.

The annual event brought 10 leaders of Austin-based semiconductor companies together with several dozen financial analysts and investors. Conspicuously absent were shooting-star startups of the type that stole the limelight at last year's summit.

Nicholas van Bavel, president of gigabit-PHY vendor Cicada Semiconductor Inc., perhaps is typical of the small-company CEOs battling for "customer traction" in a slippery high-technology market. Cicada is in the midst of a pitched market-share battle with larger competitors Marvell Semiconductor Inc. and Broadcom Corp., and is looking over its shoulder at Intel Corp., which is said to be developing its own gigabit physical-layer device.

With Marvell sewing up much of the business at Cisco Systems, the dominant Ethernet switch vendor, van Bavel has turned to Taiwan, where he says switch and network interface card (NIC) vendors are more willing to work with a startup that can help them shave a few dollars from their costs.

Skittish about startups

"It is really tough to get into the larger U.S. accounts, which creates a self-fulfilling prophecy," van Bavel said. "They are afraid of the financial stability of the startups, so they don't qualify those parts. It is so much easier to ramp in Taiwan. The qualification cycle is short, and they are so cost-oriented." Even there, van Bavel said Cicada encounters "the same skittishness about startups, and [potential customers] require assurances about supply." Still, "North American companies don't think quite the same way about working with startups as the companies in Taiwan."

Van Bavel said taming the costs of Gigabit Ethernet is essential to replacing 100Mbps Fast Ethernet next year. A Fast Ethernet NIC can be had for $4 to $5, whereas a Gigabit PHY chip now costs about $8 and the MAC another $2, both in plastic packages. Van Bavel predicted that by the end of next year, a single-chip NIC solution will sell for as little as $4.

"A $4 MAC-plus-PHY is where the price needs to be" to convert the market from Fast Ethernet to Gigabit Ethernet, he said, "and that is achievable." He said that Cicada will unveil its own single-chip plans "soon."

Several of the securities analysts here said they believe Intel is developing its own PHY for the Gigabit Ethernet market. This year, Intel is expected to sell 5 million to 7 million single-chip Gigabit Ethernet NIC chips, which include a PHY core from partner Marvell. (The PHY portion accounts for about 75 percent of the cost, the MAC the remainder.)

If Intel is successful in developing its own PHY - still an open question, given earlier failures at PHY development by Level One, now a part of Intel - it would have to give Marvell a one-year "end-of-life" notice for their partnership.

Despite tough competition, particularly from Marvell, van Bavel said he expects Cicada's own volume shipments to take off in the current quarter, producing quarterly revenue exceeding $1.5 million.

Eyes on Asia

Cicada is not the only Austin-based company developing strong ties to Asia. Cirrus Logic CEO David French said Cirrus is supplying system-on-chip silicon into two digital consumer markets that are set to take off: CD players that can handle both "ripped" MP3-format music, stored on CD-R and CD-RW platters, as well as "CDs that might have been purchased in the traditional manner."

The small flash-based MP3 players have remained too expensive for most consumers, but the MP3 CD players from Asian consumer electronics companies will sell for less than $50 and "will take the market by storm," French predicted.

French also sees great promise, starting next year, in the DVD recorder market, with "sub-$300 price opportunities." Cirrus Logic now employs about 100 engineers in China, and French said high-profile consumer giants like Sony, Matsushita and Pioneer are expected to procure DVD recorders from China-based companies that buy their silicon from Cirrus.

With prices for DVD players sinking as low as $58 at retail, DVD silicon costs are getting squeezed. Cirrus, which has been losing money throughout the downturn despite a series of layoffs, sees DVD recorders as a new profit opportunity.

Another up-and-coming product category, said French, is personal video recorders. With a high-density (40GB to 100GB) HDD on board, the PVR could let consumers watch television but skip the commercials, "without the burdensome service model" charged by Tivo Inc. and other vendors that now perform this trick, he said.

"Personal video recorders will attract buyers starting this Christmas, giving people the ability to record 40 to 80 hours of movies and create their own video record archives," he said. Nevertheless, said French, "With wars looming and terrorism abounding, it may be a tough Christmas season."

Legerity Inc., the high-voltage communications interface IC company that spun out of Advanced Micro Devices Inc. in 2000, also sees opportunities in Asia. Eric Broockman, vice president of marketing, said the North American market for voice-over-broadband has primarily used proprietary solutions for cable telephony: continuous bit rate (CBR) over ATM protocols. "Originally, people thought voice-over-Internet Protocol would be more efficient, but one study has estimated that there will be only a 15 percent cost difference between CBR and VoIP," said Broockman.

Legerity is agnostic, providing its telephone ringers and other high-voltage interface ICs to all flavors of telephone networks. For VoIP, the Docsis 1.1 standard is being refined, he said, and Legerity is working primarily with Taiwanese vendors on reference designs for VoIP systems over cable. (Another source at the conference said the Docsis standard for VoIP over cable networks will be replaced altogether with Docsis 1.2.)

"We keep very close tabs on the field trials in North America, and believe it will be 2004 before we see major rollouts here" of cable telephony, Broockman said. But the opportunity is real: Cable companies believe they can rake in another $50 a month from each cable subscriber by offering free long distance, and multiple phones, to household customers.

Legerity also sees major growth opportunities in China and India for conventional wireline telephony. Legerity has developed a DSL access multiplexer chip (to link a phone line to a central office switch) that operates directly off of the 42-volt power supply used by the batteries at China's central office telephone centers.

While many people think wireless telephony is taking over in China, Broockman said the cheaper labor there makes it easier to dig a trench to lay copper lines than in North America. And wireless long-distance phone calls are prohibitively expensive in China, the opposite of North America, where wireless calls can be made nationwide at the same per-minute rate as a local call.

Though Legerity is a privately held and does not disclose its financial results, Broockman said that revenue is "north of" $120 million. The company was hit hard by the telecom slowdown, but revenue bottomed out in the fourth quarter of 2001, he said.

"We had revenue growth of 9 to 12 percent per quarter since then, but the fourth quarter will be flat over the third quarter. Then we expect to continue to see growth again next year, based on our prospects in Asia and new products," he said.

Low power draw

Among the crop of promising Austin startups that includes Cygnal Integrated Products Inc. and Layer N Networks Inc., Intrinsity Inc. tipped new-product plans at the Austin Hills gathering. CEO Paul Nixon said that Intrinsity recently taped out its first two parts featuring dynamic logic and expects to offer alpha samples and development tools to customers late this year. Nixon also disclosed a new addition to Intrinsity's product road map, a 1.5-GHz MIPS-architecture processor that is expected to draw between 5 and 10 watts.

Intrinsity's initial parts, made with a 0.135m process, are expected to run at 2 GHz, drawing 10 W or more. Dynamic logic draws more power than a comparable static CMOS circuit, so Intrinsity recently decided to offer a 1.5-GHz part that runs cooler.

Asked if Intrinsity was finding it difficult to attract customers to an untried technology like dynamic logic, Nixon said the company has signed up seven "alpha site" customers, companies making GSM basestations, imaging systems and military applications requiring fast signal-processing capabilities.

Over the past six years, Intrinsity has developed a battery of innovative technologies that it will bring to the high end of the embedded-processor market later this year, when it begins sampling its FastMIPS and FastMath products. The FastMath part includes a special DSP engine dedicated to the matrix math functions often seen in smart antennas or image-processing systems, Nixon said.

Founded in 1997 by 22 engineers, many of them from Ross Technologies, Intrinsity developed a form of dynamic logic that it calls Fast14 (14 is the atomic number of silicon). The staff spent several years creating the internal design-automation tools needed to craft a microprocessor from dynamic-logic circuits.

- David Lammers

EE Times

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