In less than a year, Symwave Inc. Chief Executive Yossi Cohen has overhauled the chip startup he was recruited to run.
When Cohen, 44, left a longtime gig at Irvine’s Broadcom Corp. in March to head Symwave, he made a lot of changes in short order.
He moved the company’s headquarters from San Diego to Laguna Niguel, where he lives, as well as hired a trio of executives.
He also raised $10 million in a third round of venture funding in August, bringing Symwave’s total to $26 million and drawing attention from potential buyers.
But his biggest task was to take a critical eye to the company’s chip lineup.
Before Cohen came onboard, Symwave’s primary business was designing chips for FireWire, a cord that plugs into a device, such as a camcorder, to transfer data quickly to a computer.
Cohen decided to stop investing in FireWire and look for sales growth among the next generation of universal serial bus ports, or USB, the most popular means of connecting consumer electronics to a PC.
“FireWire is better than USB in terms of speed but hasn’t been as popular with consumers,” Cohen said. “FireWire only makes up less than 5% of the external connectivity solutions today.”
Users transfer photos, music, videos and data files between their handheld electronic devices and their computers via USB connections.
They’re found in nearly every consumer device, including digital cameras, cell phones, digital music players and external storage drives.
Symwave shifted its focus to developing chips for the next generation of USB ports, dubbed USB 3.0.
An upgraded USB was long overdue, according to Cohen.
“The current ones push your patience,it’s taking longer and longer the more complex files you have to transfer,” he said. “There has been no progress on the USB front in about 12 years, when we didn’t have all these gadgets.”
A few weeks ago the company debuted a chip that’s “backwards compatible,” which means it can make existing USB ports work 10 times faster.
It’s an interim step before the newer version goes big and Symwave can land the chips in consumer electronics.
“Ultimately, everything will shift over to 3.0,” Cohen said.
Potential customers include Seagate Technology LLC, SanDisk Corp., Apple Inc. and makers of cell phones and digital cameras.
He declined to say if Symwave was in active talks with any of them.
Locally, the company may look to go after Lake Forest’s Western Digital Corp., which makes external disk drives for consumers and Fountain Valley’s Kingston Technology Co., which makes flash memory drives that hook up to USBs.
Symwave’s competing against a couple of bigger, more established chipmakers looking to develop USB 3.0 chips.
Texas Instruments Inc., NEC Corp. and Intel Corp. are said to be working on some designs with an eye toward production next year.
The switch to USB from FireWire has gone over well, Cohen said.
“We received a very clear confirmation from our customers that it absolutely made sense,” he said. “It’s a much larger market and it’s more attractive.”
Spinoff of a Spinoff
Cohen, a native of Israel, is pretty proud of what the startup has been able to do so far.
“We defined the devices, developed the chips, got a manufacturer, wrote the software for it and demonstrated it,” he said. “We absolutely made the right choice and we feel very good about that.”
Symwave, which was started in 2001, is in some ways a spinoff of a spinoff. Its founders, a handful of engineers and executives, hail from Conexant Systems Inc., which spun off from Rockwell International Corp. in 1999.
Symwave has some 20 workers here and a few in San Diego and Taiwan.
It’s looking to double its local employee count and its office space in the next few months.
“We are hiring right now, intensely and aggressively,” Cohen said.
The switch to USB made Symwave a more attractive target for investors and potential buyers, according to Cohen.
“I have been told by potential investors that they want to invest in us because they think we will be acquired within 18 months,” he said.
A few months ago, Symwave did field a buyout offer from a larger chipmaker that it declined to name.
“We had gone through due diligence and it was approved by the board,” he said.
In the end, Symwave declined the offer.
“We decided we are going to be better served by building more value so we ultimately didn’t want to be acquired,” Cohen said. “But it was a confirmation that we are headed down the right path.”
