TSI Semiconductors LLC has an innovative business plan that combines the old and the new: a 30-year old fab and an organization that develops semiconductor processes for startups.
The young Roseville, Calif., company is led by CEO Sagar Pushpala, a veteran of the analog and mixed-signal semiconductor industry. After 25 years working for Intersil, Maxim Integrated Products, and National Semiconductor, Pushpala spent a year at venture capital firm Khosla Ventures advising semiconductor startups.
Some of these chip companies would hire the Silicon Valley Technology Center, a semiconductor R&D firm and small-scale manufacturing facility that had been spun out of Cypress Semiconductor Corp. in 2007, to help them develop their semiconductor manufacturing processes.
While most of the startups' technologies never got off the ground, about one in five got to the stage of producing a chip in volume. At that point, however, they took their design and moved it to a big foundry like TSMC.
Pushpala already served on the board at German consumer electronics company Telekfunken, which had purchased the 30-year-old fab in 2011 from Renesas Electronics. The fab was originally built in Roseville in 1984 by NEC to make DRAMs. Renesas, and subsequently Telekfunken, had been using it to build automotive chips. Telefunken also owns a 6-inch fab in Germany, also focused on automotive.
“I saw this opportunity and told them they should buy SVTC and bolt that onto their existing semiconductor manufacturing operations,” Pushpala told me. “So then they'd have the opportunity to provide customers with scale.”
Thus, TSI Semiconductors was born. SVTC became TSI's technology, development, and commercialization services division, which continues to do development work on a contract basis. As it happens, the old manufacturing tools and processes at the Roseville fab are suitable for analog and mixed-signal chips, says Pushpala. And he sees an emerging need for a foundry that can build such chips.
“If you look at the iPad, there are a lot of analog chips in there,” he says. “And I see a lot more emerging markets, such as medical devices.” These companies all want to develop their own proprietary analog processes, and the combination of TSI's development services and volume manufacturing could be perfect for that.
What's more, Pushpala sees a business that serves not only startups, but also older, established analog and mixed-signal chip companies. Most of them used to manufacture their own chips, but many have started switching to using foundries, he says. Both Maxim and Intersil, for example, have transitioned from “asset heavy” to outsourcing the majority of their chip manufacturing, he says.
He thinks TSI can capture this business because it both understands analog and because it is closer to home, so IP is better protected. In fact, he noted TSI has a multibillion-dollar customer that specifically said “they didn't want to develop their process in Asia, they wanted to develop here to protect their IP.” So far TSI has 15 customers.
Thus, by combining those two acquisitions, TSI hopes to appeal to both established analog players as well as the new. “Our sweet spot,” Pushpala says, “is a combination being a foundry that focuses on analog/mixed signal and being a foundry that focuses on R&D.”