An Irvine wireless chip designer is looking to raise a round of funding after winning a favorable patent ruling.
Axiom Microdevices Inc., which has raised $26.5 million in venture funds since it was founded in 2002, would use a next round of financing to boost its engineering, sales and marketing operations, said Chief Executive Brett Butler.
The company designs chips that help cell phones get better signals while easily connecting with other handset chips.
Butler declined to say how much Axiom is looking to raise in its next round.
“We’re looking to raise enough to get us to profitability,” Butler said. “It’s a pretty reasonable amount of money.”
Menlo Park-based U.S. Venture Partners led the company’s first funding, a $10.5 million round in early 2003. In the summer of 2004, Santa Monica-based Anthem Venture Partners led a second round of $16 million.
Axiom declined to disclose its annual sales. The company hopes to get its chips into major production by next year, generating significant sales, Butler said.
U.S. District Court in Texas recently freed Axiom to sell its chips again by lifting an injunction in a patent dispute case. Axiom competitor Austin, Texas-based Silicon Laboratories Inc. had sought to block the company from producing its chips.
Investors like Axiom’s chip for the lucrative cell phone market. The wireless sector is a popular target for venture funding.
The company’s pitch: Its chip is the first to combine what normally requires several chips for the power amplification function of a cell phone via a popular format called CMOS, or complementary metal-oxide semiconductor. Power amplification boosts a cell phone’s signal, which improves reception.
The Axiom chip works with the world’s most popular technology standard that drives cell phones,Global System for Mobile Communications, known as GSM, and another related standard.
Combining several functions into the single chip format should make it easier for phone designers to link the power amplifier functions with the other parts of the phone. There could be cost savings, too.
“Axiom has the intellectual property that can integrate the last major cell phone function,” he said.
The company’s technology faces stiff competition, said Asif Anwar, an analyst with Boston-based Strategy Analytics.
Competitors include Silicon Laboratories and Woburn, Mass.-based Skyworks Solutions Inc., which was created when Newport Beach-based chipmaker Conexant Systems Inc. split off its wireless chip business and combined it with Alpha Industries Inc. a few years ago.
The companies that sell the traditional chips that handle signal amplification have 80% to 85% of the market for that part of the handset, Anwar said. Cell phone makers that buy the chips include LG Electronics Inc. and Motorola Inc.
“LG and Motorola are comfortable with that technology, and they will continue to rely on that technology,” Anwar said. “I’m not discarding Axiom’s efforts. I’m just saying it’s going to be hard for them to gain traction … for at least 12 to 18 months.”
Anwar also said Axiom’s chip may not save handset makers much in costs.
Butler said the company’s technology is unique and crucial to the next generation of phones that will handle more music, photo, video and other multimedia files.
He said the company already has been in talks with leading cell phone makers, which he declined to identify, to buy its chips.
Butler, who arrived at Axiom about a year ago, spent 13 years at Texas Instruments Inc. He most recently headed TI’s combined wireless local area network and digital subscriber line units.
He said his job often required him to integrate startups that TI acquired. When he saw the technology Axiom had, he knew the company was on to something.
“I had seen a lot of startups in my time,” he said. “They often don’t really have something that others don’t. Axiom was the first company I have probably seen that truly had something that no one else could do.”
The chip can easily work with other chips in a cell phone, and Butler would like to see Axiom expand its product line.
“We certainly want to be more than just a power amplification company,” he said.
Silicon Laboratories filed its initial lawsuit in early 2004. The publicly traded company posted nearly $500 million in sales last year and has a market value of about $2 billion.
Axiom’s victory wasn’t comprehensive, according to court documents. The jury said Axiom mishandled some “trade secret data sheets.”
The court said that while there were no patent violations, the data sheets would need to be returned. Axiom was ordered to pay Silicon Laboratories $250,000, plus interest, though not for the trade secrets.
Axiom had been barred from selling its chips for several months. Customers have bought test samples in the weeks since the announcement.
“The bottom line is we got past it,” Butler said. “Our product is done. Our product is ready to go.”
Will Axiom become part of a larger chip company,say TI or even Irvine-based Broadcom Corp.?
Don’t count on it for now.
“Our goal is to grow Axiom to a company that can stand on its own,” Butler said. “I moved out here to grow the company.”
