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Axiom Speeds Growth with Funding, Move, New Execs

Irvine startup Axiom Microdevices Inc. is making headway in a bid to get its chips in cell phones after a rocky start in the past few years.

Axiom wrapped up a big round of funding in February, moved to larger space in July and hired a handful of executives locally and in Asia.

“It’s been a rocket ride this year,” Chief Executive Brett Butler said.

It also saw its chips, which help cell phones get better reception, go into mass production with a deal inked early in the year with Ningbo Bird Ltd., a Chinese cell phone maker.

Bird assembles Axiom’s chips into phones sold by Britain’s Vodafone Group PLC that are marketed to consumers in Asia, Europe and Australia, according to Butler.

Butler declined to give sales figures for Axiom. Vodafone phones make up the bulk of sales, he said.

“The Vodafone deal is one of the most successful phones that we have a product in,” he said. “I can tell you that we see it flying off the shelves in Europe.”

The company isn’t profitable but expects to reach that point “in the near future,” Butler said. It has about 40 workers in Irvine and a handful in China.

In February, the company closed a third round of funding worth $25 million, bringing its total raised to about $52 million.

The funding has been used “to take us into production and through break-even as a company and to propel us from being a startup into being fully operational” Butler said.

The company, which a year ago was working solely with prototypes, now churns out about a million chips a month through contractors in Asia.

Axiom expects to produce 11 million chips by the end of the year, according to Butler.

Next year could see as many as 28 million chips turned out, he said.

That would be a big gain for Axiom, which saw some growing pains in its early days.

In 2005 the company faced a patent lawsuit from Austin, Texas-based Silicon Laboratories Inc., which sought to block the company from producing its chips.

Butler was brought on board to handle the aftermath.

“We were being sued by a big company, and that does all kinds of things to a startup in terms of its focus,” he said. “We have gotten over a tremendous number of hurdles to get this product to market, the least being a lawsuit that consumed a lot of attention and cash.”

Axiom prevailed after a U.S. District Court in Texas lifted an injunction.

“We managed to keep on track with our product development in order to prepare for the post-lawsuit days,” Butler said.

Axiom makes a power amplifier chip, which helps grow a phone’s signal so that cell towers can “hear” it, Butler said.

Power amplifiers are one of key three functions in a phone. The others are a baseband chip, which operates like a tiny modem, and a radio transceiver, which turns a digital signal into an analog one.

What’s different about Axiom’s chips is that the company has found a way to make them cheaper using complementary metal-oxide semiconductor technology, the most common form of chip making known as CMOS.

“I believe we can do that at half the cost of our competitors,” Butler said. “That’s the significance of this.”

Competitors include Silicon Laboratories and Woburn, Mass.-based Skyworks Solutions Inc., which was created when Newport Beach chipmaker Conexant Systems Inc. spun off its wireless chip business and combined it with Alpha Industries Inc. a few years ago.

Making the chips via CMOS smoothes out potential production delays, which helps cell phone makers get their products to market faster, Butler said.

“This is a billion dollar market, so supply is very important,” he said. “We are the only company who is doing it that way.”

Axiom’s chips are made in Taiwan and then sent to South Korea to be put onto circuit boards.

The company is set to release new chips toward the end of next year. It sees itself becoming a bigger player as the price of cell phones go down.

“We plan to do bigger and better things,” Butler said. “I think we will continue to see a substantial amount of growth next year. We are a very small part of the market right now so there is a lot of room to grow.”

So far, there’s no talk of being acquired or another exit strategy.

“We are not really thinking at that point yet,” Butler said. “What I’m trying to do with the team here is to build a company. If you build it to stand on its own there are a lot of options for an exit.”

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