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Shelley Souza, Optionetics.com
October 5, 2001

The semiconductor industry has been hard hit and analysts have continued to be cautious   about when this market is likely to recover. Intel (INTC) and Applied Micro Devices (AMD) have been in a pricing war the past few months in hopes of boosting business in a sluggish market. Transmeta (TMTA), a new wireless chip that Linus Torvalds (of Linux fame) worked on is moving into the embedded market in hopes of widening their prospects of becoming profitable. Looking at CNet’s (CNET) VC Watch, two companies that secured their latest round of financing are in the semiconductor industry. Both companies are tackling next generation solutions and pushing the envelope.

The first company is Xyron Semiconductor, which received part of its first round of funding. Institutional investors and former Microsoft (MSFT) executives are cited as investors. The report said the company “developed microprocessor circuits that allow existing and future microprocessors to automatically manage their workload without using clock cycles.” In plain English, they plan to speed the processes 10 to 100 times faster than current technology permits. The company also has a prototype analog to digital converter that has been designed to produce increased accuracy of conversion, at higher speeds and with less corruption of the data.

The other company, Tropian, is further along in its funding. Merrill Lynch (MER) led the fourth round of investment that raised $45 million to bring its total funding to $82 million. Tropian has come up with a radically new design for the way in which wireless vendors make their products. According to Stan Bruederle, chief semiconductor industry analyst for Gartner's [IT] Dataquest market research unit, Tropian “definitely has a different approach to doing the transmit-side of mobile handsets.” Technology like this is going to be critical as 3G evolves because these systems are becoming substantially more complex, and anything that provides a simple solution is going to be favorably received. Tropian’s sales director said the wireless industry changed its stance from “You can't do what you say you’re doing,” to “If you can get this product in my hand, we'll use you.” The company said other semiconductor manufacturers are working similarly but that Tropian has a year’s lead to the marketplace. They expect to get their product into the market by the third or fourth quarter of next year.

The work of both these companies points to the future direction of growth in the wireless and semiconductor sectors. Investors who are cautious about investing in unproven companies can use this information and check it against their favorite blue-chip semiconductor companies that are already established, to see if these companies are likely to match these new developments in order to keep ahead of curve.


Shelley Souza
Senior Writer & Trading Strategist
Optionetics.com ~ Your Options Education Site
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