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Fabless ASIC camp gets funds

Posted: 01 May 2008 ?? ?Print Version ?Bookmark and Share

Keywords:fables ASIC? funding? intellectual property?

Structured-ASIC provider eASIC Corp. revealed it had raised $48 million in late-stage financing, joining a number of other fabless ASIC vendors that have completed sizable funding rounds or taken other steps to boost their competitiveness in recent months.

The shot in the arm comes none too soon for the struggling industry segment, which some industry watchers contend is on its last legs.

The new eASIC funding brings the total capitalization in the fabless ASIC house to $80 million. The new funds will be used to develop the company's design and intellectual-property (IP) infrastructure and to devise "next-generation products," said Ronnie Vasishta, president and CEO. The company did not elaborate, but observers speculated that the ASIC house is developing products at the 65nm process node.

In good company
Other fabless ASIC houses have also made headlines in recent months. Late last year, Bahrain's Unicorn Investment Bank BSC acquired a 75 percent stake in Open-Silicon Inc., a fabless ASIC house, for $190 million. And fabless player eSilicon Corp. recently purchased the existing product lines and certain assets of SwitchCore AB, a provider of high-performance Ethernet switch chips.

Fabless ASIC houses appear to be digging in and positioning themselves for what could be a tough year in the semiconductor business overall. Various market researchers have already lowered their IC forecasts for 2008 amid signs of weak demand and a possible U.S. recession.

Last year was a good one for ASICs, with strong demand from the handset, game machine and related sectors, said Jordan Selburn, an analyst with iSuppli Corp.

However, "it's going to be a sluggish" 2008, Selburn said. While he insisted the reports of the ASIC's demise are greatly exaggerated, he acknowledged that the market is projected to grow at half the rate of the overall chip business this year.

The segment has already seen a shakeout. LSI, Fujitsu, NEC, Oki, Toshiba and other ASIC makers either have retrenched or are struggling to reverse poor sales. The question is whether the shakeout now will extend to the smaller, fabless ASIC houses.

"I don't think that is the case," Selburn said. In fact, to a large degree, the fabless ASIC model "has been successful in a niche fashion," he said.

IDMs such as Texas Instruments, IBM, STMicroelectronics, NEC, Freescale, Sony, Toshiba and Renesas dominate the ASIC segment, collectively claiming a whopping 90 percent, according to iSuppli. But some IDMs could end up going fabless themselves in the distant future.

Tech performance
Meanwhile, some ASIC technologies are faring better than others.

For years, the ASIC business was split into two big markets: standard cells and gate arrays. For standard-cell parts, an OEM would go to an ASIC house and use its design tools to devise a chip nearly from scratch. In contrast, gate arrays are predefined, unconnected parts that are held in stock prior to metallization.

More recently, vendors have rolled out so-called structured ASICs, which claim the advantages of both cell-based designs and gate arrays. Structured ASICs have predefined metal layers, but designers can precharacterize what is on the silicon.

There has been more hype than sales in structured ASICs, however. At one time, predictions were that the market would hit $1 billion by 2007 or 2008. But structured ASICs today constitute a far more modest, $150 million business, according to iSuppli.

"As a whole, the structured ASIC business has been a bust," Selburn said, noting that LSI and NEC have exited the market. The remaining players include Altera, AMI, ChipX and eASIC.

ChipX recently introduced a new class of devices that it calls Hybrid ASICs, which implement a structured ASIC as IP on a standard cell. The approach is claimed to facilitate rapid and economical product line development, saving companies an average of $300,000 to $500,000 in NRE and tooling costs and enabling them to introduce derivative products two to three months faster than today's methodologies allow.

ASICs down but not out.

Company focus
For its part, eASIC "is gaining significant market traction" in structured ASICs, said Vasishta. "We're ramping up on our design wins and volumes."

The privately held company is seeing gains in the communications and other segments, Vasishta said. Some 35 to 40 percent of its business is coming from standard-product vendors, which are pushing products that combine eASIC devices with their own IP.

According to Vasishta, eASIC is gaining business at the expense of traditional ASICs and FPGAs. "We are replacing FPGAs; we have a power and price advantage," he said. "There is a point where a customer will still do a traditional ASIC, but that option is extremely expensive."

Seeking to displace FPGAs in the marketplace, eASIC in 2006 came out with a line of 90nm structured ASICs that were claimed to have "zero" NRE costs.

The recent eASIC financing round was led by Advanced Equities Inc., with participation from previous investors Khosla Ventures, Kleiner Perkins Caufield and Byers, Crescendo Ventures, and Evergreen Venture Partners. Craig Klosterman, eASIC's chief financial officer, also invested in the latest round.

"Khosla Ventures was an early investor in eASIC and is delighted to see the promise of this disruptive technology become a reality," Vinod Khosla, founder and general partner of Khosla Ventures, said in a statement.

- Mark LaPedus
EE Times

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