eASIC lands $12 M from Khosla's Kleiner Perkins

By siliconindia staff writer   |   Thursday, 03 June 2004, 19:30 IST
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CALIF: The founder of ChipX has raised $12 million from Kleiner Perkins Caufield & Byers in a first round of institutional capital for eASIC, a new start-up developing structured ASICs. The blue-chip venture capital firm has provided $5 million to the start-up already and will invest another $7 million later this year, said Vinod Khosla, a general partner at Kleiner Perkins and now director at eASIC. Because San Jose, Calif.-based eASIC previously raised $2 million from individual investors in two rounds, the $5 million financing is a Series C round. Khosla said Kleiner Perkins invested in eASIC because the start-up's structured ASIC technology can relieve a major problem in the semiconductor industry - the skyrocketing costs of developing application specific integrated circuits. "We looked at probably four to five start-ups before deciding on this one. We think it is by far the best opportunity in the area," said Khosla. Established semiconductor players like LSI Logic Corp., Fujitsu Ltd. and NEC Corp. and start-ups like Flexlogics are also developing structured ASICs, but the investor argued that eASIC's technology is dramatically better. Khosla also said that eASIC's capital efficiency attracted Kleiner Perkins. "That's one of the things that impressed me about Zvi - how close he was to products on how little money," Khosla said of Zvi Orbach, the start-up's chief executive and a founder and former CEO of another structured ASIC firm ChipX. Orbach left ChipX, then known as Chip Express, in 1998 and founded eASIC in 1999. eASIC is nearing full production of its chips - expected in January 2005 - with only $2 million, keeping costs low because three-fourths of the firm's staff of nearly 50 is in Romania. Orbach said he aims to reach profitability in 2005. The start-up touts a superior alternative to ASICs, which are used for a broad range of electronic devices but have become extremely costly to develop and manufacture in recent years. eASIC's structured ASIC combines the best features of the programmable FPGA and the high performance ASIC while lowering the cost of chip development. Orbach believes customers will place orders in part because the start-up has eliminated one of the most costly elements of ASIC development: the mask sets used to etch circuit patterns onto semiconductors. Today each mask costs between $600,000 and $1 million. Because an ASIC requires a mask for each layer of circuits, costs rise quickly with the complexity of the ASIC, up to and beyond $10 million per chip. eASIC is one of many companies that have developed a structured ASIC. But eASIC's chip requires only one mask for the via layer, which is part of the interconnect between two metal layers. Its competitors have products that still require six to eight masks. "We're pushing lithography beyond what people expected it to do," said Orbach. The start-up uses an electron beam to write the via layer, a process that is slow but will be kept between one and four hours because the via layer consitutes only about 1% of the area of a chip. The result is that a wireless LAN chip with two million gates for the base station will cost $500,000, said Orbach. A standard ASIC today would cost $10 million to do the same. An MP3 player chip that would normally cost $3 million to develop would now require only $100,000. eASIC also promises to shorten the design cycle dramatically. ASIC designs can take six to 12 months; Orbach said his technology will cut that down to two to four months. Likewise, the typical two to six months of manufacturing becomes two to four weeks with the start-up. eASIC is on the way to customers and revenue, and will use its new capital to bulk up marketing and sales. Forty potential customers are evaluating eASIC's technology, and many are interested in using the firm's structured ASIC in their next product design cycles, according to Orbach. eASIC has also licensed its technology to STMicroelectronics and Flextronics. Revenue in 2004 will be approximately $1 million, but Orbach expects that figure to shoot up in 2005 and perhaps take eASIC to profitability. In addition to Orbach and Kleiner Perkin's Khosla, the board also includes Andrei M. Manoliu, managing director of GrowthPlans LLC, Lavi Lev, executive vice president and general manager of Cadence Design Systems Inc., and Atiq Raza, founder of Raza Foundries and Raza Ventures.