SUNNYVALE, Calif. After hitting a few speed bumps along the road, fabless ASIC vendor eSilicon Corp. appears to have regained its momentum and has expanded its strategy.
ESilicon (Sunnyvale, Calif.) continues to push the leading-edge in ASIC designs and is building up a portfolio of intellectual-property cores. It has also taken its first steps on the acquisition trail by recently buying Sweden's SwitchCore AB, a provider of Ethernet switching chips.
At the time of the acquisition late last year, SwitchCore was at or near bankruptcy. The company's latest product was late to the market, and Switchcore was simultaneously was embroiled in a lawsuit with EDA vendor Synopsys Inc.
Instead of liquidation, SwitchCore decided to settle its suit with Synopsys and subsequently sold its assets to eSilicon for about $3 million in cash. The deal could boost eSilicon's bottom line; SwitchCore's products could generate sales from about $800,000 to $1.7 million a year, according to the company.
Despite the acquisition, eSilicon has no plans to migrate away from its fabless ASIC business model. It will not become a supplier of standard chip products, said Jack Harding, president, chief executive and chairman of eSilicon, in a recent interview at the company's headquarters here.
ESilicon has no plans to develop new versions of SwitchCore's products. The fabless ASIC house will continue to support SwitchCore's existing products and customers for a ten-year period, Harding said.
Going forward, eSilicon is looking for similar types of opportunistic acquisitions, which mainly involve troubled or cash-strapped companies that are seeking a "soft landing," he said.
There are many startups that are in financial trouble in the market, but the boards or venture capitalists "don't want to shut them down," he told EE Times. Instead, they ''are looking for soft landings for the walking wounded."
The acquisition of SwitchCore is part of a new and expanded strategy for eSilicon, one of pioneers in the fabless ASIC business. Last year, eSilicon was the world's largest ASIC fabless house, with some $60 million in sales, according to Gartner Inc. (Stamford, Conn.). Another vendor, rival Open-Silicon Inc., was No. 2 and was slightly behind eSilicon in terms of overall sales, said Bryan Lewis, an analyst with Gartner.
Other fabless ASIC suppliers include eASIC, Altera, Faraday and Global Unichip. Still, the ASIC market is dominated by the integrated device manufacturers (IDMs), such as TI, IBM, STMicroelectronics, NEC, Freescale, Sony, Toshiba, Renesas and others, according to iSuppli Corp. (El Segundo, Calif.)
Founded in 2000, eSilicon emerged and brought a new concept to the market: the fabless ASIC model. Prior to 2000, companies that didn't have their own fabs had two choices for the development of ASICs. Companies could work with a traditional ASIC supplier that owned a fab or they could develop a circuit by themselves.
Fabless ASIC houses offered a third alternative. They can help customers bring their ASICs to the market by providing a range of third-party services. Fabless ASIC houses also claim they can develop or manage an ASIC project at a less expensive rate than if customers did it themselves.
Today, there are fewer and fewer companies that can devise their own ASICs from scratch due to soaring design costs and complexities, Harding said. "Our theme is: 'Do-it-yourself' is dead," he said.