Irvine-based Menlo Microsystems Inc., which has developed an electronic switch that it claims will be “the most disruptive technological innovation in the electronics industry since the advent of the transistor,” is attracting attention from tech and political heavyweights.
Last week, Menlo Micro announced it’s raised an additional $150 million, including an investment from the designer of Apple Inc.’s original iPhone.
It’s planning to build a new manufacturing facility with at least 160 jobs that caused no less a politician than U.S. Senate Majority leader Chuck Schumer (D-New York) to call and lobby Menlo Micro Chief Executive Russ Garcia.
“I made it clear to Menlo’s CEO that I strongly support locating their new cutting-edge microelectronics fab in New York, and our multiple shovel ready sites from Rochester to the Capital Region and beyond are the perfect location for Menlo Micro’s new investment and job creation,” Schumer said, according to a March 1 post on the senator’s website.
Ideal Switch
The national spotlight is putting focus on the potential of Menlo Micro, which was spun out of General Electric’s Global Research Center to commercialize a new microelectronic component called the Ideal Switch.
Think of the Ideal Switch as a new, advanced iteration of the semiconductors used by local tech powerhouses like Broadcom and others to power smartphones, cellphone towers and other products, although Garcia says Menlo Micro doesn’t cleanly fall into the “chipmaker” segment of the tech industry.
Among its most recent investors were Vertical Venture Partners, which also invested in 2016, and Tony Fadell’s Future Shape LLC.
Fadell, who has 300 patents to his name, is credited with inventing the iPod and helping to design the iPhone.
“The Ideal Switch is poised to replace every switch that distributes power,” Fadell said in a statement. “It is the most ubiquitous electrical component in the world—20 billion are shipped each year.
“The Ideal Switch changes fundamental math on power delivery to cities, buildings, homes, and appliances from EVs to lights. It will cost less, last longer, act smarter, and lower climate-busting emissions thanks to its energy efficiency profile.
“Menlo Micro is one of the biggest technology disruptors of our generation,” he added.
$100B+ Market
The latest Series C round brings Menlo Micro’s total cumulative funding to over $225 million; the company hasn’t disclosed its internal valuation, though the new funds likely put that figure over the billion-dollar threshold.
Other investors in the latest round included Fidelity Management & Research Company, DBL Partners and Adage Capital Management along with existing investors Standard Investments, Paladin Capital Group, Piva Capital and PeopleFund.
“Today’s funding milestone underscores the confidence our investors have in Menlo Micro’s transformative technology to fuel the electrification of everything and modernize the $100+ billion market for RF communications, power switching and protection devices in the 21st century,” Garcia said in a statement last week.
“It will enable us to expand our manufacturing in the U.S. and accelerate the development of our power roadmap to solve some of the world’s most pressing challenges.”
Garcia has more than 30 years of experience in electronic and semiconductor industries at companies like Silicon Systems, Texas Instruments and Microsemi, the latter of which has invested in the company.
He became CEO of Menlo Micro after it was spun out of GE, which invested 12 years of research into the switch, producing “60 patent families” and a series of GE-qualified products.
Revenue Ramp Up
The company claims the switch “will revolutionize energy distribution, wireless communications, defense and aerospace industries, and consumer electronics by making electronics smaller, faster, and more efficient and powerful.”
The company says the Ideal Switch is 99% smaller, lighter, and more efficient than conventional switches and electromagnetic relays.
The tiny switch is designed to be used in components for products in a host of industries and next-gen technologies, ranging from smart phones to aerospace applications to radio-frequency systems.
“Our first year of revenue was last year,” Garcia told the Business Journal last week, saying revenue was more than $8 million.
“We expect (revenue) to grow significantly this year,” he said.
“We expect to achieve profitability and cash-flow positive over the next few quarters,” Garcia added.
Irvine Operations
Garcia said “we do all of our product development” in Irvine and “our operations are centered here.”
The company currently has about 50 employees, with another 25 to 30 to be added this year.
“We will grow revenue by multiples,” he added.
Garcia says that the products of companies such as his—integrated circuits and micro electromechanical systems— are built with a semiconductor manufacturing process and therefore are often considered semiconductor companies.
“We presently use a semiconductor foundry in Sweden, which we will continue to use,” according to the CEO.
A new domestic site will provide additional capacity in the U.S., which more politicians are calling for after fears of a trade war with semiconductor powerhouse China and bottlenecks that have slowed industries like car manufacturers.
The company said it is “exploring domestic semiconductor manufacturing locations in California, New York, Texas and Florida.”
Garcia said any California site would be in the northern part of the state.
Leaning New York?
In a sign of which way Menlo Micro is leaning, it posted Schumer’s comments on its website.
“I stand ready to help Menlo Micro in any way for an investment in New York and will continue to fight to further cement New York as a global hub for electronics manufacturing,” Schumer said.
Garcia says Menlo Micro will produce an array of products at its new U.S. manufacturing site, including frequency millimeter wave products for communications, aerospace and defense as well as smart power products for industrial automation, mobility and charging infrastructure.
The company is looking to make sales to the federal government and has been making hires to boost that business.
