eSilicon, the fabless custom chip semiconductor company, started to get anxious about the financial crisis last week, according to the company's CEO, Jack Harding.
"Looking around at other companies' executives I think they were satisfied with things until last week", said Harding, "now I think people are sitting on POs (purchase orders) waiting to see what happens. But VCs are still investing in start-ups, and people have maintained smaller inventories than they did, which means they have a lot less exposure. That experience level is boding well for the semiconductor industry."
It is eight years since Harding established his business model, in which eSilicon takes on the financial and technical risk of producing a customer's chip and sells it back to the customer as finished silicon.
"We deliver a packaged, tested, final product with our customer's logo on which they can use or ship to their customers", said Harding.
eSilicon can improve its margins by superior engineering. If it can make a smaller chip with higher yields using less power it delivers a part which is more profitable for eSilicon.
eSilicon has produced 100 designs for 60 customers. 98 per cent were first time right, said Harding. 40 chips have gone into full-scale manufacturing and the company is now receiving revenue from ten to twelve new chips every year.
eSilicon will do $80m this year in revenues and will have its first profitable year, said Harding. He expects to have revenues of $100m next year. "We're growing at 20 per cent a year", said Harding. Head count is 120 people.
He sees no need to raise more money and expects the next funding round will be the company's IPO.
Harding sees the ASIC market as a robust affair. "The ASIC market is four times larger than the FPGA market. The FPGA market is flat to shrinking." eSilicon has a foot in both camps producing silicon for both FPGAs and ASICs.
eSilicon has foreign design centres in Shanghai and Romania. "Shanghai's no bargain", said Harding. "Salaries are going up at 20 to 25 per cent a year and they're already high - much higher than in Romania - and in China the turnover of people is 30 per cent a year."
Nonetheless Harding expects to be adding to the designers in Shanghai. "We're there because our customers want us to be there. Over the next two years we will ramp up China. There are signs that China is becoming more high-end."
He reckons that consumer products will provide the majority of the growth in the immediate future.
eSilicon has yet to do a 40nm design but says it has signed two contracts to produce 40nm chips for customers.
David Manners, Silicon Valley
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