Ex-Consultant Gets Temasek to Help It Build the TSMC of Chip Design

(Bloomberg) -- One startup aims to become the go-to provider of chip design solutions for companies as more tech firms like Apple Inc. start to develop their own custom processors for PCs and servers to challenge industry mainstay Intel Corp.  

Bundang, South Korea-based SemiFive Inc. offers system-on-a-chip design solutions that can help companies cut development costs and time in half, a strategy similar to the foundry model Taiwan Semiconductor Manufacturing Co. pioneered for chip production. 

To realize its ambitions, SemiFive has raised 130 billion won ($109 million) at a $326 million value, said Brandon Cho, who founded the startup in 2018 with backing from SiFive Inc. The latest round drew Temasek Holdings Pte’s Pavilion Capital and several local asset management firms as new investors, joining previous backers SoftBank Ventures Asia and LB Investment. 

Following the round, SiFive holds a stake of about 20% in the startup. Cho, who spent five years leading semiconductor-related projects at Boston Consulting Group in Seoul after earning a PhD in computer engineering at Massachusetts Institute of Technology, and a group of fellow founders have more than 10%.

“If chip clients bring 30% of the ideas needed for custom chip designs, we, as a platform provider, can offer 70-80% of modules, like what Android is offering for software developers,” Cho said. “Big tech companies like Tesla, Apple, and Meta are strengthening their own chip capabilities and there’s an urgency that the current fabless value chain may not be sustainable. I think chip design houses will collapse and the fundamentals of the fabless industry will change.” 

SemiFive has integrated chip architectures for edge servers, high performance computing (HPC) and Internet of Things (IoT) products and aims to expand its portfolio to autos and microcontrollers. It’s currently working on eight projects from Korean companies including artificial intelligence chip startup FuriosaAI and Rebellions. The chips under SemiFive’s projects will be produced by Samsung Electronics Co.’s foundry fab.

Its competitors include China’s Verisilicon Microelectronics (Shanghai) Co., which provides one-stop custom silicon services and chip IP licensing, and Taiwan’s Global Unichip Corp., a full-service SoC design foundry. SOCs, the basic building block of modern smartphones, consolidate processing, graphics and memory into a single module, unlike the discrete components of desktop PCs and most laptops.

Total orders last year reached 30 billion won, generating revenue of 10 billion won, Cho said. The company targets to double its orders and grow sales five times this year, he said. 

The Korean chip startup, which runs global operations in India and Vietnam, aims to draw clients in the U.S. and China this year, though the pandemic is making it more challenging to break into new markets, Cho said. 

“We will pursue one more funding round at the end of this year if we need another acquisition,” Cho said. “If not, we’d skip another funding round and go for pre-IPO in 2023. Our target is to list shares as early as in 2024, hopefully in the U.S.”