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TSI Finds New Life in an Old Fab

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.

Established firms
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.”

11 comments on “TSI Finds New Life in an Old Fab

  1. Tom Murphy
    June 6, 2013

    This is such a refreshing story.  I'm so tired of hearing people say there are no opportunities.  That just doesn't stop entrepreneurs who can always find a need and fill it.

  2. Marianne
    June 6, 2013

    Some clever engineers can re-invent an existing product for new uses.

  3. SP
    June 6, 2013

    Its always good for the country's economy if the manufacturing is done locally. But if the minimum wages are much higher locally, companies are forced to outsource it globally. And of course the laws in many Asian countries are not that strict, so it can be played with safely.

  4. _hm
    June 6, 2013

    This is a wonderful news for semiconductor industry. There are plenty of niche market areas with better margins and appreciation as compare to some of so called common man popular fields.

    We did get few custom chips developed for Miltary and have paid $100K, $250K and more. There is lots of work there too. But my love will be Analog ASIC or like MCM replacing hybrids. This too has good potential for auto and medical electronics industries.

     

  5. chipmonk
    June 7, 2013

    All success to them ! BRAVO

    For 2 decades US technology has been siphoned off to the Orient ( the original and geographically correct definition of nations – Japan excluded – that now hide behind the appellation of Asia – Pacific ) with active persuasion from Wall St. It takes real Asians like Khosla the Billionaire VC ( and co-founder of Sun Microsystems ) to put up resistance to the eggregious IP theft. Khosla has put his money to where his mouth is – at TSI.

    US technologists & start – ups should stop going to the Foundries in the East and lose their IP. Instead of being led to the slaughter like lamb they should take advantage of TSI. And TSI needs to add more Analog BiCMOS processes including Si – Ge & FD SOI to their process portfolio. 

    It is sincerely hoped that China-loving traitorous Wall St. run by Henry Kissinger's cohorts will not be able to derail Khosla's plans.

    P.S. : just yesterday the BBC reported that for the last 2 weeks Kissinger was in China coaching the Chinese President how to bargain hard with Obama during their 2 day meet at Palm Springs starting tomorrow.

    With “naturalized” citizens like Kissinger still on the loose it is silly of the US to even bother about “small fry” like the Al Qaeda. Through his 40 year long advocacy of China ( who are his paying clients ) Kissinger has caused 1000x harm to the US compared to Bin Laden. This is because they can operate above the Law as no one dare criticize him or his ilk.

  6. Tam Harbert
    June 7, 2013

    Yes, I found this a very encouraging story as well. I hope there are more semi veterans out there who come up with new business models like this.

  7. _hm
    June 7, 2013

    @Chipmonk: All of us do our best and soon, we will have better days like those golden years. Also, we look and take more aspriration from people and organizations doing good work and try to forget and forgive those not doing their part for USA. It may take some more time, but more innovation is in pipeline.

  8. Tom Murphy
    June 7, 2013

    SP: Ibeg to differ. It's often better to buy manufactured items from elsewhere becuase it can give you an economic advantage. I think what you meant is that it is better to keep the manufacturing jobs you have rather than ship them overseas. I agree with that, but it's not the same thing.  Why build a factory in the US to make chop sticks that cost $10 a pair when you can already buy Chinese-made chopsticks for 50 cents? 

    But computers? Better to keep the factory in the US than shut it down and ship the jobs overseas. We did that wrong. And now some companies are finding out when they try to repatriate their profits. They won't get much sympathy from the taxpayers they laid off.

  9. Tom Murphy
    June 7, 2013

    SP: Ibeg to differ. It's often better to buy manufactured items from elsewhere becuase it can give you an economic advantage. I think what you meant is that it is better to keep the manufacturing jobs you have rather than ship them overseas. I agree with that, but it's not the same thing.  Why build a factory in the US to make chop sticks that cost $10 a pair when you can already buy Chinese-made chopsticks for 50 cents? 

    But computers? Better to keep the factory in the US than shut it down and ship the jobs overseas. We did that wrong. And now some companies are finding out when they try to repatriate their profits. They won't get much sympathy from the taxpayers they laid off.

  10. SP
    June 8, 2013

    when companies take decisions to shut down manufacturing in US and move to their own subsidaries in say Mexico, the morale of the workforce gets severely affected. I witnessed the emotions of many manufactring engineers and technicians when suddenly after a few respins, the management decided to shut down the entire unit at Phoenix and moving to Mexico.

  11. Tom Murphy
    June 10, 2013

    SP:  On the other hand, I'll bet the Mexican town that landed that plant was celebrating.  Such is the nature of global trade.  There are winners and losers in every business deal.  The supply chain is win-win-win-win when producers, buyers, distributors, and customers all benefit. But, absent inflation, the continual improvements in margin suggest someone is losing somewhere. Yesterday, it might have been Phoenix. Next year, it could be Shenzen.

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