EW@60: A good time for start-ups

Peter Claydon

He writes:

Every industry has a birth and childhood, grows into adulthood and may eventually die.

I was born in 1961 and when I was a child solid state electronics was also a child. I was fascinated by it. At university I became interested in the business of electronics as well as the technology. The university library subscribed to Electronics Weekly and Electronics Times and I read both regularly.

The semiconductor industry was also moving into its teenage years. There were exciting new start‑ups and I almost unconsciously assumed that the thing to do was get lots of experience, think of an idea and then start a company. That’s how the world worked.

Looking back, I think that the semiconductor industry matured into adulthood around the turn of the millennium. In the 1960s and 70s you could start a semiconductor company with its own manufacturing for a few million dollars (Intel was founded in 1968). By the late 1980s, most new companies were fabless and you could tape-out a new chip for a few tens of thousands of dollars.

By 2000, when Doug Pulley and I founded Picochip, you needed tens of millions of dollars to get a company that developed complex chips to profitability, and then there was software, which turned out to need more investment than the chips themselves.

All this increased the money needed still more and stretched times to market. The result was that investors focused on the rich pickings promised by software companies and there were fewer new chip companies.
Since the 2008 crash the industry has increasingly consolidated into fewer large companies and analysts said that the chip industry was entering middle age, like the oil and automotive industries.

But recently investors have decided that there is money in ‘deep tech’. It takes a lot more money (possibly hundreds of millions of dollars), but there is less competition and the rewards for chip start-ups are getting larger.

We founded Picocom two years ago and, despite the world crying out for 5G Open RAN (radio access network) technology, we’re the only chip start‑up in the market, so for me the chip industry is as exciting a place to be as ever.

The big chip companies move slowly and develop incrementally; it’s the start‑ups that are disruptive and it seems that parts of the investment community now appreciate this again.