IPO on the cards for eSilicon next year

Asic design and production services firm eSilicon is taping out two chips a month, is close to breaking even, plans an IPO for next year and is launching a service for people who already have chips on the market.

At the moment, the company designs chips for fabless firms and OEMs, takes the chip through the production stage, and sells the chip back to the fabless company or OEM which commissioned it.

The firm bears the costs and the risk of getting the chip into production. The customer does not pay any-thing until 30 days after delivery of the finished chips to the customer. It has been a popular formula.

“We plan to do $75m in revenues this year,” said Hugh Durdan, vice-president for marketing at eSilicon. Concerning the level of revenue at which eSilicon would become profitable, Durdan replied: “$80m.” He said he expected the firm would reach figure “some time next year”. He also said the IPO is likely to take place next year.

The company has 40 designs currently in hand, and expects to get 20 chips into production every year to 2009. It claims a 98 per cent first-time-right silicon rate.

Chip prices range from 40 cents to $400. The biggest chip it has done is 10 million gates. Bigger chips don’t mean bigger profits because, as Durdan explained: “The larger designs usually have lower volumes and longer time to market. Five million gates is the sweet-spot with the chip at 6mm on a side.”

The firm has a design centre in Bucharest, Romania, where engineers’ salaries are one fifth of those in California. The new service will provide production services for any company even if eSilicon has not designed the chip.

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