Due Diligence update: PicoChip

As picoChip’s management team gets a makeover, here we provide an updated perspective on our Due Diligence first published in March 2003. The Chilli’s Due Diligence on picoChip said with regard to the than 3G basestation market:

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“There are successful, long-term relationships between incumbent suppliers and equipment makers. Both sides would be loath to forego these, unless there is a significant pain point being addressed by a new entrant. In this kind of market, a startup will need a good partner network.

picoChip faces stiff competition from incumbent suppliers such as Texas Instruments (TI) and Analog Devices (AD) and other startups attacking 3G basestation sockets. TI currently claims to have eight out of the top ten operator sockets. It is not clear if these are evaluations or solid design wins. Another UK-based start-up, Aspex Technology, with its massively parallel technology, is also eyeing this market as is Morphics, recently acquired by Infineon.

High-end, massively parallel technology has stumbled along, from 3D graphics/virtual reality to network processing/cryptography, through DSL and now onto basestations, with each segment held by a number of commercially strong incumbents.

Future segments for many of these companies would include wireless metropolitan area networks (IEEE 802.16) and mobile broadband wireless access (IEEE 802.20). So picoChip is in a fortunate position as it has the ability to diversify into other markets.”

The Chilli perspective on the future As alluded to in The Chilli’s Due Diligence two years ago, competition in the 3G basesation arena has been stiff and diversification towards what is now termed as WiMAX (namely 802.16d) is a very wise move, where picoChip has an excellent chance of quickly garnering a few strategic design wins. It also has the flexibility with its software to upgrade to 802.16e, when the specs are released.

The company is also now in a fortunate situation in that it has the processor silicon, the software, the reference designs for WiMAX and – more importantly – ten key design wins, some of which will go into volume production.

The core management team has had a new makeover and is now headed by a new CEO: Guillaume d’Eyssautie, an industry heavyweight who most recently was general manager of Cadence Europe and general manager of IBM’s technology group that included the microelectronics division. Prior to that he was at Conexant (Rockwell), GEC Plessey, Philips Signetics and Matra Harris Semiconductors.

Joining the new CEO is Iain Silvester as chief financial officer (CFO). Silvester joins the company from holding the position of finance director at Bristol, UK-based video compression technology specialist Motion Media PLC, where he managed the company's flotation on the official list of the LSE (London Stock Exchange). Motion Media was floated in 2000, capitalised at £140m, and was acquired in 2004. This experience and know how would be very useful as picoChip prepares the grounds, possibly via a mezzanine round, before a potential exit via an IPO.

Jonathan Brooks, non-executive chairman of picoChip and himself formerly CFO and director of ARM Holdings, commented on the appointment, "We are delighted to welcome Iain. His experience and credentials, particularly in helping to bring a technology startup to maturity, are an ideal match for a rapidly growing high-tech company like picoChip."

The management team was also strengthened by the appointment of Tom McQuade as the company’s VP of North American Sales. McQuade has been tasked with the development of picoChip’s business activities in North America and to drive market penetration for the company’s WiMAX basestation solutions. He will report directly to John Graham, VP worldwide sales at picoChip.

McQuade joins picoChip from Globespan where he was director of strategic accounts and responsible for sales in California. Prior to Globespan, he was VP worldwide sales at T.square, a successful startup that was acquired by Globespan. He also held senior sales positions at Brooktree and Toshiba America, Inc.

With the renewed, re-energised management team, The Chilli expects some more exciting milestone achievements, strategic design wins and acceleration towards its Chilli R3 and exit goals.

© Chilli Publishing Ltd 2005

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