It's the ecosystem, stupid!
Zhu sees China as an ideal location for his company, because “every piece of ecosystem in the electronics industry is here.” Along with indigenous OEMs, he noted that Apple, Samsung, Motorola, and Nokia have manufacturing bases in China.” That makes it easier for GigaDevice to plug in to their supply chains.
GigaDevice began with “a good idea to develop the highest-speed memory in the world,” said Zhu. Despite a successful prototype, Zhu recalled that OEMs like Huawei, Cisco replied: "Are you going to be around for the next three years?"
GigaDevice’s initial business model was selling its IP to other chip companies. RockChip (Fuzhou, China) became the first vendor to license its IP, followed by China foundry SMIC.
Eventually, the company ditched its IP licensing business to focus on developing and selling its own NOR flash devices. GigaDevice has applied for more than 100 invention patents and has so far been granted 26 patents.
The company employs about 180 workers here. Unlike many companies here pursuing apps processors who need a ton of software engineers who write codes, GigaDevice doesn’t need a lot of software engineers, Zhu said.
The company has completed three rounds of funding, raising close to $20 million. It is planning an IPO in China, but Zhu declined to comment on its timing, saying only that “it gives us a platform for future mergers and acquisitions.”
IHS iSuppli reported in July that NOR flash memory sales growth “may be tapering off in mobile handsets and smartphones, but lucrative embedded applications in the tablet, automotive and industrial markets are picking up the slack.” The change in memory market dynamics appears reflected in a fragmented supplier base. There is also a split between high-volume, low-density SPI NOR chips for cheaper applications on the one hand, and high-density parallel chips for high-end systems on the other.
IHS iSuppli cautioned that “newer implementations of NAND-based Embedded MultiMedia Card solutions that emulate NOR capabilities have resulted in NOR falling out of favor” but Zhu countered that 60 percent of 2.5G cell phones are still using NOR flashes. Local cellphone platform suppliers such as MediaTek, Spreadtrum and RDA switched to SPI NOR flash chips in 2011, he noted.
NOR flash is traditionally used in cell phones to store small amounts of executable code such as user interfaces and address books.
“I don’t see, at least over the next five years, any competing technology that will replace NOR flash,” Zhu said. But when such a disruptive technology emerges, “we should have capital muscle big enough to acquire it."
Horizontally, GigaDevice is gunning for the embedded flash market where it believes thousands of customers and sales channels exist. Vertically, GigaDevice is committed to developing new technology along with custom solutions integrating flash and logic.
The company’s design advantage includes the fastest speed and the smallest die-size NOR flash memory products.
Still, becoming a top player in the memory remains a tall order. “If you’re number one, it’s good. Number two, it’s tough. But if you’re number three, well, you lose money and die,” Zhu acknowledged.
GigaDevice President Yiming Zhu in his Beijing office lobby.
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