Startups seeing the world through others’ eyes

May 16, 2008 – Traveling through the New Forest in Dorset, UK, where wild ponies graze by the roadside and stroll untended down village streets, to the medieval city of Bath, it’s hard to believe this southwest corner of the country is a high-tech haven recognized as a European center for silicon design. Government-funded and private research initiatives, business network organizations, and local university collaborations are helping to accelerate the pace of growth in this region and promote it globally.

Last week Born Global, an event focused on leveraging international partnerships, was held in this area, sponsored by Silicon SouthWest, an organization supported by the Microelectronics Institute and a university partnership that includes the Universities of Bath and Bristol. The target audience was clearly potential silicon start-ups, although there were a good number of venture capital recruiters and other consultants represented among the 100+ attendees. Industry analysts and experts from successful start-ups offered insight and advice sharing their own philosophies and paths to success.

The message of the day was summed up by opening speaker Bipan Parmer, co-founder/chairman/principal analyst of The Chilli, an online network platform for technology entrepreneurs and investors: “If you don’t have India or China as part of your strategy as a start-up, forget it. You have to recognize that purchasing power,” he said, noting the 350 million members of India’s middle class.

Parmer, a former analyst for Gartner Dataquest Europe, offered a global perspective on markets and locations, focusing in particular on India’s growth in the semiconductor industry, addressing the motivation and resources of the region, and how it got to be positioned as it is today. In the 1980s, he explained, India invested in education but there were few jobs to be had, so 70% of students went to graduate school in the US and many to work at companies like IBM and Intel, progressing until the hit the proverbial glass ceiling. Then there was a “reverse brain drain” where those engineers moved back to India to start companies. Parmer noted that startups in India are pursuing the fabless design model because it is more of a “complete ecosystem” from chip design through package assembly and device testing, rather than the traditional model of handing off their IP to wafer fabs.

His advice for global start-ups: set clear objectives, identify your core expertise realistically, identify the best cost place for key functions, adopt a corporate “friend” and their eco-chain, and approach the market via an incubation center or cluster organizations. “The global shift is massive,” he said. “Recognize that — don’t wait for it to come to you. You have to go for it, explore new business models and customer delivery models.”

James Foster, CEO and founder of Bristol-based XMOS Semiconductor, provider of software-defined silicon for supporting circuit boards, development tools and software components, said his company has been globally focused since birth because the revenue, suppliers, and leadership clusters are not in the UK — XMOS’ key customers are in Asia, Europe, and the US, the wafer supplier is in Taiwan; packaging is done by Unisem Group in Wales; and IP providers are from Europe, the US and Asia. Foster identified several key points of succeeding on a global scale: hire the best; have regional management based on local practices and with loose and slow control loops back to headquarters; and align global focus and review to a simple “big picture” set of objectives.

picoChip, a fabless semiconductor company targeting access point femtocell for all types of wireless basestations, outsources wafer foundry work to TSMC, and uses ASE for wafer probe, packaging, and final test. Founded in 2000 in Bath, the company similarly was “born global,” according to COO Peter Claydon, and experienced rapid growth, receiving its first round of funding by June 2001 and making its first prototype chip within 18 months. By 2005, it had distributors in Japan, China, Korea, Taiwan and Israel, and direct sales in the US. In 2007, they opened a development center in Beijing. Claydon reiterated Foster’s point that there is a skills shortage in the UK for this industry, and so after the first year of operation, picoChip began importing talent from outside the UK.

The migration of electronics manufacturing goes from west to east, noted Luca Perego, of Chinese flagship foundry SMIC, which was a start-up itself in 2000 and has experienced rapid growth. Perego said that China has become the world’s largest IC market, expected to reach $124B by 2010 in overall consumption, and that mutual success can be achieved collaborating with SMIC not only as a wafer foundry, but helping to establish customers in China.

Perego described the company as a big company with a young mentality. “It has fast, nimble responses of a young company,” he said, “and knows the importance of helping and nurturing start-ups.” SMIC partnered with UTAC, a semiconductor assembly and test service provider, on a joint venture in Chengdu, and has teamed up with IBM to develop 45nm processes. He talked about the company’s multi-project wafer service (MPW) as an affordable option for start-ups because multiple customers or projects share common masks and engineered wafers.

Fiona Burgess of Vale Partnerships talked about the benefits of global partnerships, sharing her four years of experience at Clearspeed as a start-up, how they went through the process and how partnerships proved to be good for their investment. When a big company such as Intel or Hewlett Packard is associated with your name (e.g., through a purchase order) it increases clout with investors and end customers. When choosing a partner company, she advised attendees to make sure their product accelerates growth in their company’s area. “Anything you can do to exploit green technologies will have strong flavor in big companies,” she noted.

When it comes to strategic partners, Burgess advised that they be treated as any other key customer. Understand their business drivers and structure. Join any free partner programs they have. Find an ally within the company; someone who will go beyond the bounds of their job to help. Bring them leads. And finally, don’t expect too much at first — see the world through their eyes. — Francoise von Trapp, managing editor, Advanced Packaging


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