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Issue #2003 - 30 (November 2003)
(Updated Nov. 26, 2003)


Industry Catches On Multi-mode Chips

RFco is one of several start-ups trying to ride that revolution by making low-power chips that can handle all kinds of radio frequencies for data and voice transmission.

The ideal would be able to handle the main cell phone transmission formats, Global System for Mobile Communications GSM) and Code Division Multiple Access (CDMA), as well as the wireless Internet access format Wi-Fi and Bluetooth, a short-range wireless format to easily share data between a phone and a computer. And to do all that on a single chip, offering seamless communication.

World phone is a goal

For cell phone makers, such a chip would make it possible to produce a "world phone," which could receive and send calls from anywhere. It would give the cell phone makers huge economies of scale, and for consumers, it would be a big step forward in convenience.

That is the long-term goal for radio frequency, or RF, chip companies. Analysts agree that it will be a daunting challenge but that success could be very lucrative. And while venture investment in information technology start-ups in the United States continues to be weak, it has been picking up in some fields. 
"Low-power RF chips is one of the areas that is generating a lot of excitement," said Richard Shaffer, editor of VentureWire, a newsletter that tracks venture investment. 

According to Shaffer's newsletter, which Dow Jones publishes, eight RF chip start-ups have raised a total of $150 million so far this year.

Two months ago, RFco announced its existence, emerging from "stealth mode," in Silicon Valley jargon, and saying it had raised $16.5 million in a first round of financing from four venture capital firms: Allegis Capital, Advanced Technology Ventures, Mobius Venture Capital and Technology Associates Management. 

For competitive reasons, RFco executives and their venture backers are still reluctant to discuss their proprietary technology in much detail. Even if everything goes right, they note, and RFco's concept is workable in silicon, the company will not have a product on the market until 2005.

Yet they do say RFco is pursuing "a revolutionary architecture" in the design of low-power radio frequency chips. The design, Kubinec said, is intended to make radio chips malleable and programmable as never before, just as the programmable microprocessor brought a new level of versatility to digital logic chips in the early 1970s, opening the door to the personal computer.

"Is it a big risk?" Mobius Venture Capital's Galanos asked. "It is. But I looked at other RF chips companies, and this is radically different." 

Kubinec first glimpsed the concept in 1996 when he was a research fellow at Advanced Micro Devices and served as an adviser to Stanford, reviewing inventions generated by professors to see if they were worth trying to patent. Two professors, Bruce Lusignan and Bruce Wooley, had an idea for a programmable, low-power radio chip. At the time, Kubinec recalled thinking, "Boy, that's the holy grail." 
Kubinec, an expert in communications chips, worked in the communications division of AMD, and he persuaded his boss, Forte, who was then a senior vice president, to agree to buy a two-year option to license the technology, time enough to build a prototype chip to see if it worked. Forte gave the nod, and AMD pursued it.

The result was promising. But in 1998, AMD closed down the unit that made communications chips as a way to conserve money that was needed to focus on challenging Intel in the PC microprocessor business. So, all rights to the technology reverted back to Stanford.

Kubinec had left AMD and in 1999 was consulting for Silicon Valley investors. When one of them asked him to look at a radio chip idea, he met with Mark Cummings, a former researcher at SRI International, who, unbeknownst to Kubinec, had followed the Stanford research since the start and had licensed the rights after AMD walked away.

Kubinec joined Cummings, and the two set off to put together a team and find venture financing for the start-up. It proved a struggle. "When we started, the only thing people wanted to fund was dot-coms," recalled Cummings, who runs a specialized investment firm that has a stake in RFco. 
Later, when the dot-com bubble burst, the venture capital firms were so consumed with closing down wayward start-ups and retrenching that they had no interest in making new commitments. And the chaos in Silicon Valley lasted longer than the start-up team had hoped.

Three times, RFco had reached agreements with venture capital firms, and three times the firm backed off--in one case while Cummings and Kubinec were waiting to hear from their bank that the money had indeed been transferred.

But things began to change last year, as venture capitalists became increasingly interested in the wireless field and radio frequency chips. Forte joined the company this January, giving RFco a further boost.

"That really put us over the top," Kubinec said, "because Rich is a senior semiconductor executive with a proven track record." 

There is, of course, no assurance that RFco will succeed. Another radio frequency chip start-up, Ditrans, folded in August after a reported $25 million had been invested in it. After it missed a technical target in a prototype test, the venture backers decided that going forward would be too lengthy, costly and risky. 
"It just wasn't going to make it," explained Geoffrey Baehr, a venture partner at U.S. Venture Partners, an investor in Ditrans. "Trying to build these flexible, multimodal RF chips is excruciatingly difficult, and no one has done it yet." 

RFco is supposed to get a prototype silicon wafer back from the IBM microelectronics factory in Burlington, Vt., next month. Like other radio frequency chip start-ups, RFco is a so-called fabless semiconductor company, meaning that it farms out the chip fabrication to a contract manufacturer. Then, it will begin testing whether its design innovation really works.

"We're still in the prove-it mode," Forte said. "But this is a real interesting proposition. It brought me out of retirement." 

Entire contents, Copyright 2003 The New York Times. All rights reserved.

For more information: http://www.rfcosemi.com

MobileInfo Comments and Advisory: There is no doubt in our mind that multi-mode chips have a bright future. It is in the nature of  Physics and number of wireless networks operating in different bands. The tough act is in implementing software controlled radios and directional antennas where theory is there but practice is not in abundance. We expect SDR (software Defined Radios) to untangle the knot of multi-mode chips. Here, academic research institutions could help forward looking startups in building prototypes. RFco has yet to prove it can be done. But it is only after these trials that we shall succeed.  We wish them luck and will watch the results anxiously. 

Note: This news release may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of Securities Exchange act of 1934 in USA. Similar provisions exist in other countries. There is no assurance that the stipulated plans of vendors will be implemented. MobileInfo does not warrant the authenticity of the information. Readers should take appropriate caution in developing plans utilizing these products, services and technology architectures.  All trademarks used in this summary are the property of their respective owners.

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