SAN FRANCISCO With $17 million in venture funding in its pocket, Kenet Inc. is preparing to attack the market for high-speed analog-to-digital converters with technology based on research at MIT's Lincoln Labs.
Kenet's technology team has crafted a formula to produce CMOS data converters with ultrahigh sampling rates and ultralow power consumption. The company's backers believe Kenet has what it takes to compete with the likes of Analog Devices, Philips Semiconductors and Texas Instruments in the portable consumer products area. Reps are already visiting potential customers in Japan and South Korea; Kenet's first products are to be formally unveiled this fall.
The Reading, Mass., company is targeting the market for high-performance A/D converters-specifically, 10-, 12- and 16-bit devices with sampling rates in excess of 100 Msamples/second. This segment of the data converter market will ring up $200 million to $250 million in total sales this year, according to Kenet estimates based on forecasts by DataBeans Inc. (Reno, Nev.). The high-speed data converter segment, which includes D/A converters as well as A/Ds, is expected to reach $1 billion by 2008, said Gerhard Sollner, the MIT scientist who now serves as Kenet's president and chief executive officer.
The market for signal-conditioning circuits, the analog front ends of which Kenet also intends to produce, will total $800 million in 2005, Sollner added.
CEO Michael Anthony, also from MIT's Lincoln Labs, believes Kenet can build those high-sampling-rate devices with startlingly low power consumption. That combination would allow high-speed direct-conversion devices to be used in portable handheld systems like cell phones, cameras, wireless Internet browsers and digital multimedia receivers.
While Kenet has declined to reveal its technology prior to the formal launch of its first products, the company was founded in August 2001 with the aim of commercializing an MIT development called FemtoCharge CMOS technology. Lincoln Labs was engaged in military research at the time, and FemtoCharge CMOS is still so secret that the term yields nothing on a Google search.
A recently completed Defense Advanced Research Projects Agency contract established the immunity of Kenet's analog circuitry to CMOS substrate noise, CTO Anthony acknowledged, but he refused to provide more details.
Responding to speculation that Kenet's technology might represent some form of nanoscale current weighting, Anthony said only that the technology was scalable with CMOS geometries. Common CMOS analog complaints-that tighter line widths and lower voltages incur losses of analog headroom and dynamic range-do not apply here, he insisted. This means that Kenet's A/D converters and analog front ends could be integrated with CMOS digital ASICs, conceivably with 90-nanometer process technology.
Despite the secrecy, potential customers briefed under nondisclosure agreements are getting excited, Sollner said. "When we tell people our specs, they are first incredulous," he said. "But then they quickly become converts."
Kenet's marketing personnel, some of whom have launched products at Analog Devices and Globespan, have been visiting potential customers overseas and have had a very good reception, Sollner said.
Whether a laboratory-oriented startup has the wherewithal to go against established commercial players in the competitive consumer and communications markets is still an open question. Medical scanners and imagers may be more accepting of prepackaged parts, with somewhat higher prices, than consumer products. But competitors are pursuing those markets as well.
The startup company collected $7 million in April 2002 and $10 million this May from venture capitalists like Venrock Associates, Kopin Corp., the CP Group and Oak Investment Partners. "Kenet is ready to go to market," said Iftikar Ahmed, senior vice president at Oak Investment Partners. "They will provide best-in-class A/D converters."
At the same time, Kenet's formidable intellectual property gives Oak something that "early-stage investors" will call an "exit strategy," Ahmed said. Oak- whose incubates have included 2Wire, Aras, CoVi Technologies, Excel Switching, Kineto Wireless and Movaz Networks-is not averse to having one of its properties acquired by a larger company in need of the IP. Thus, Kenet might wind up licensing its technology to a potential competitor, rather than competing as a fabless semiconductor maker. "It's a big market," Ahmed acknowledged. "And Kenet's position is still young."