Business Model of IC Startup Companies Returned from Overseas

cfi

Business Model of IC Startup Companies Returned from Overseas [Copy link]

Business Model of IC Startups from Overseas Returnees
Venture Capital Plus Technology: Business Model of IC Startups from Overseas Returnees

Article Author: Anonymous Source : Unknown [ Abstract]: Technology, financing capabilities and close relationship with the international IC market are the obvious advantages of IC design companies from overseas returnees. Their main source of funds is venture capital, so they have a clear market and product positioning from the moment they are established. In addition, the company's managers and core technical personnel have many years of design experience in Silicon Valley and have built a strong information network in the industry. Dingxin Semiconductor is such a company. Compared with some local innovative companies in China, their business model is unique. " Other companies first have a team and technology before looking for customers, but our business model is to establish a company after having customers and sales guarantees, and the specifications of the chip are determined together with the customers. Finally, we recruit talents with a purpose." said Chen Kai, the company's CEO. He believes that the first step of the industry chain should be system definition, followed by chip definition, chip design, production, testing and packaging. System definition requires customer participation and commitment to ensure future product sales. Of course, the product must be attractive to users and must be innovative. The principle they follow when positioning their products is "those who have the ability do not want to compete with us, and those who want to compete with us do not have the ability to do so." Based on this principle, they chose RF devices for PHS phones and digital cordless phones. " When we were founded , we had a very clear product direction: to design a single-chip RF solution for the 2.4GHz cordless phone and PHS phone market, replacing the current solution composed of multiple chips such as PLL, LNA, VCO, mixer and transceiver, which can reduce costs by more than 30%." He said. Why did you choose this market? He analyzed the following reasons: " |6-[ _{CQh& h7 1: Due to the unclear application prospects of the PHS system in the past few years, large IC manufacturers in Europe and the United States did not care about this market. They invested more than 100 million US dollars in the market, and there are many wireless fields that they are interested in. But it is different for start-ups. Our investment is small and the cost efficiency is high. The market of tens of millions is enough for us to survive and develop. According to current forecasts, if the sales volume of a single product we develop can exceed 5 million pieces, we can make a profit. @i_|^ lW k l &A }F 2: The entry threshold of RF chips is high and requires strong experience. Not every emerging company can do it. Although local innovative IC companies in China are interested in this market, they may not be able to make it. \h0)v'E Ei0.L:z* 3: China's patent protection laws and regulations are not strict, and the development of digital products is easy to be copied, and the initial investment risk is high. Analog products cannot be reverse-engineered, especially RF products. Every design detail cannot lack experience, and all layouts are handmade. K{_<ABPZlp DKT!Z7,) "Our business model enables us to make such high-tech products. Because we first determine the product to be developed, and then recruit some related very experienced talents. The background of Silicon Valley has created this business model. "He said. VG[ xv ] XQH>Dn}7waIn addition, the close relationship with the industrial chain is also helping them to grow rapidly. According to Chen Kai, TSMC has listed them as one of the six IC design companies that provide direct services in China, although their first sample analog cordless phone RF chip was launched in April this year, and the samples of digital phones and PHS phones will not be released until the second half of the year. He explained: "TSMC selects the companies with the most development prospects in China as the objects of direct service. Except for us, the other companies are already in mass production. Like venture capital, TSMC is optimistic about the future development prospects. For example, Marvell was selected by TSMC without mass production, and now it has developed into a very successful IC company. " lC id:T .$>q 9'c\} Although they have the help of Giant, their future is not without worries. Although these returnees who come back to China to start a business are very experienced in design, technology and industry, they have never really operated a business, have no experience in large-scale commercial operations, and lack understanding of China's unique market environment. Chen Kai admitted that they will face many difficulties in the future: for example, they lack senior administrative management personnel who understand China's national conditions and can handle various matters such as taxation and import and export, and senior personnel who need to manage inventory and logistics after mass production. In addition, although the main customers now are the leading manufacturers in the industry, after the expansion of production, they need to enter more small and medium-sized OEM customers, which requires sales personnel familiar with the Chinese market. "We have now achieved from 0 to 1, but in the process of from 1 to 10, we need to continue to grow. The key issue is when to add these business personnel to the technical team. Introducing them too early will waste resources, which is a question of how to integrate resources. This degree is not easy to grasp. "He said. [b E mdm B 9% o9t1Q0In addition, based on his many years of experience in Silicon Valley, he also made suggestions for China's IC design industry: the development of China's IC industry should avoid bubbles. The central government and local governments are very supportive of integrated circuit design. Some innovative integrated circuit companies can easily raise funds, but these IC companies are not necessarily established under the guidance of the market. For example, the success of a design in a laboratory does not mean that it can be put into large-scale production. Mass production requires a qualitative leap in design capabilities. However, when investing, the government often has little verification and consideration in this regard, so there will be some bubbles in the investment. He hopes that the government will consider allocating funds in a way that matches private funds.