Cswitch raising new round for production of communications chips

Venture Beat — Wed, 19 Mar 2008 05:00:18 -0700

Chip start-ups have always viewed the communications/networking market as prime territory to launch a new semiconductor chip. Cswitch in Santa Clara, Calif., is coming at the market with a different approach. And it is raising a new round of cash to do so.

Doug Laird, CEO of Cswitch, said in an interview that his company is seeking its third round of funding to complete production of its chips, which have been under design since 2004. The company has finished the design and has produced engineering samples. To date, the company has raised more than $41 million in two rounds.

Here’s its unique approach to the market. Like eASIC, which recently received $48 million in funding (our coverage), Cswitch seeks to exploit the gap between two major markets: the $20 billion custom chip (application specific integrated circuit, or ASIC) market and the $3.7 billion FPGA market (field programmable gate arrays). More on the gap in a sec.

Internet, particularly video on the web, is creating the demand for Internet infrastructure — the same demand helping eAsic. That, in turn, creates demand for communications chips that can process data at ever higher rates. But Laird says: “There is a growing gap between FPGAs and ASICs.”

The ASIC chips (like those being designed by Aquantia, our coverage) are cheap to produce but come with high upfront design costs. They are used for volume production of cihps. FPGAs are expensive but they can be programmed at the last minute. Thus, they are useful as prototype chips and can be used to get a product to market quickly, albeit expensively.

Laird says his company is designing chips with high-speed switches that are customized for the communications and networking markets. But they’re also programmable, just like FPGAs. Hence, Laird says the chips combine the best of both worlds for customers in the communications market. eASIC, by contrast, focuses more broadly on all sorts of markets.

To elaborate, Laird said his company can create chips that process data with extremely high bandwidth needs. The chips can process data with speeds of 40 gigabits to 100 gigabits a second, while typical FPGAs can handle no more than 10 gigabits to 15 gigabits a second. The chips go into Internet switches and routers or storage devices made by companies such as Cisco, Juniper Networks and Brocade.

Previously, Cswitch raised a $30 million round in 2006 led by Harris & Harris and GF Private Equity. Earlier investors also participating were ATA Ventures, Charles River Ventures, Bay Partners, Masters Capital, Mitsubishi UFJ Capital Co., and Micron Ventures also participated in the investment.

The new round will get the company’s sample chips into high-volume production, said Laird, who before Cswitch served as an entrepreneur-in-residence at Charles River Ventures and before that was the founding engineering chief at Transmeta.

The company has 62 employees. Laird declined to name the exact amount his company is seeking, saying it depends on whether the investors plan to take the company through production or through profitability.