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April 7, 2003 — A funny thing happened to Integrated Micromachines Inc. on the way to creating an all-optical switch: The bottom fell out of the telecommunications equipment industry.
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So, the Monrovia, Calif.-based company switched gears and diversified its business. Today, IMMI is focused on building low-pressure sensors and gyros, and demand is growing so quickly for its foundry services that it plans to seek funding this summer to expand the facility.
The company has delivered a few of its optical switches. “They’re working perfectly, we’re very pleased with the device,” said Art Huskey, the company’s chief executive. “But the telecom carriers have had this terrible pressure on their revenues and capital spending. They’re just not buying capital equipment these days.” Huskey said he thinks recovery will likely take years.
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“The all-optical cross-connect market is horrible,” agreed Lawrence Gasman, president and chief analyst at Communications Industry Researchers Inc., which tracks the telecommunications industry. As the market has contracted, a lot of smaller firms focused on optical switching have disappeared, Gasman said, and most of the remaining ones “are holding on for dear life.”
The massive replacement of existing telecom systems with all-fiber-optic ones that was widely anticipated in the mid- to late 1990s simply hasn’t occurred except in a couple of cities that desperately needed the added capacity.
In the meantime, foundry services and the demand for custom design services are growing nicely, the company says. The 70,000-square-foot facility has two wafer fabs, one for production and one dedicated to R&D. A recent discussion centered around how the company could schedule the time it needs in the fab for its own products without disrupting work for outside customers. That’s one of the reasons the company wants to add some equipment and expand its assembly capability.
So IMMI put its wafer fab to work, producing customized MEMS products for other companies. The fab is the engine that is fueling growth as the company works to develop products in other areas.
IMMI will likely return to its roots, building a line of very low-pressure MEMS integrated sensors used primarily in the heating, ventilating and air conditioning market. The company has produced a prototype that it is demonstrating to prospective customers. The devices are so sensitive they can detect just 2 inches of water — about 0.07 PSI (pounds per square inch), Husky said.
IMMI hopes to ramp up production of its sensors in the third quarter of this year. The sensors were considered too expensive when IMMI first began developing them four or five years ago. “Our prices will be revolutionary,” Huskey said. He expects to deliver the sensors at 30-50 percent below competing products.
The company is also developing MEMS-based gyros for video game controllers and joysticks. Huskey said there is not a lot of competition so far, and the video game industry is growing steadily.
IMMI’s operations are self-sustaining financially, Huskey said, although he declined to cite revenues at the privately held, venture-backed company. The company’s roster of investors includes Cisco Systems, Adams Capital Management, Falcon Fund, Hallador Venture Partners, Invesco Private Capital, Juniper Capital Ventures, SunAmerica Ventures, Venture TDF and UOB Venture Management.
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Company file: Integrated Micromachines Inc.
(last updated April 7, 2003)
Company
Integrated Micromachines Inc. (IMMI)
Headquarters
1400 South Shamrock Avenue
Monrovia, Calif., 91016
History
The company was founded in July 1995 to commercialize technology developed by Denny K. Miu and his fellow researchers at the University of California, Los Angeles, and California Institute of Technology. Miu became the company’s first president and CEO and was succeeded by Art Huskey. IMMI began its life in a Pasadena-based incubator. After outgrowing its facility in 2000, the company moved to its current Monrovia location.
Industry
MEMS component design and manufacturing
Employees
170
Small tech-related products and services
IMMI has historically manufactured scalable MEMS-based low-insertion-loss optical switches based on a proprietary ELITE (Extremely Low-loss Inductive Torsional Engine) methodology. ELITE technology stems from single-crystal silicon micromachining techniques and electromagnetic actuation. Recently, the company broadened its base to include building MEMS-based gyros and low-pressure sensors, as well as enhancing its role as a foundry for other companies.
Management
Selected strategic partners and customers
Cisco Systems Inc. has been a key investor and partner with IMMI, providing $25 million in IMMI’s second funding round and working with the company to locate potential clients. Cisco also uses IMMI’s MEMS-based subsystems in its own applications.
Investment history
IMMI initially received private equity financing in June 1996, with $900,000 from private investors and UOB Venture Management (Singapore). A $4 million round followed in January 1999, with money contributed by Venture TDF and Juniper Capital Ventures. The company’s first venture capital round closed in April 2000, garnering $15 million from previous participants as well as Adams Capital Management (round leader), INVESCO Private Capital, Hallador Venture Partners, Falcon Fund and SunAmerica Ventures. A $45 million second round of financing closed in March 2001. Contributors included INVESCO Private Capital (round leader), Cisco Systems, Adams Capital Management, SunAmerica and Venture TDF.
Barriers to market
IMMI must juggle the competing pressures of:
Selected competitors
Goals
“IMMI’s goal for 2003 is to have a world-class MEMS foundry serving large and small customers,” said Art Huskey, the company’s chief executive. “We want our foundry to be known for superior quality and fast turnaround.”
Why they’re in small tech
“We believe that small tech provides opportunities for growth and profitability,” Huskey said.
What keeps them up at night
“I lose sleep over customer growth, meeting our forecast and balancing the load on our development team between work on our own products and our customer support,” Huskey said.
Relevant patents
Latching mechanism for optical switches
Micromachined voltage controlled optical attenuator
Micromachined acceleration activated mechanical switch and electromagnetic sensor
Batch fabricated semiconductor micro-switch
Recent articles
With telecom’s fall, all-optical turns into hybrid MEMS switches
Contact
— Research by Gretchen McNeely